A Stock Is Currently Priced at $44 a Share While

question 5

Multiple Choice

A stock is currently priced at $44 a share while the $45 call option is priced at $1.22.The call option delta is .86.What is the approximate call price if the stock increases in value to $45?

• A)$0.12
• B)$0.26
• C)$0.96
• D)$1.98
• E)$2.08

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Definitions:

Contract Interest Rate

The agreed-upon rate of interest that will be charged or paid on a financial contract, such as a loan or bond.

Issued at Discount

When a bond or other security is sold for less than its face value.

Semiannually

Referring to an event or action that takes place twice every year, often at six-month intervals.

Par

The face value of a bond or stock as stated by the issuing company, which may differ from its market value.