The Current Market Price of a Share of a Stock

question 59

Multiple Choice

The current market price of a share of a stock is $80.If a put option on this stock has a strike price of $75,the put

• A)is in the money.
• B)is out of the money.
• C)sells for a lower price than if the market price of the stock is $75.
• D)A and C.
• E)B and C.

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Definitions:

Dividend Paid

Dividend Paid refers to the amount of earnings distributed by a corporation to its shareholders as a reward for their investment.

Preferred Stock

A type of stock issued by corporations, which gives holders a right to share in earnings and liquidation before common shareholders do.

Capital Stock

The general term applied to the shares of a corporation.

Preferred Stock

A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock.