The Current Market Price of a Share of CAT Stock

question 59

Multiple Choice

The current market price of a share of CAT stock is $76. If a call option on this stock has a strike price of $76, the call

• A) is out of the money.
• B) is in the money.
• C) is at the money.
• D) None of the options are correct.

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Definitions:

Collection Time

The average period it takes for a business to collect payments owed by its customers.

Check Clearing

The process of transferring funds from the bank on which a check is drawn to the bank where it was deposited.

Transaction Motive

The need to hold cash for the purpose of conducting day-to-day business transactions.

Disbursement Activities

The process involving the payment of money from a fund or account, typically referring to the cash flow outgoing from a business or individual for expenses, investments, or other financial purposes.