The Current Market Price of a Share of Disney Stock

question 27

Multiple Choice

The current market price of a share of Disney stock is $60. If a call option on this stock has a strike price of $65, the call

• A) is out of the money.
• B) is in the money.
• C) can be exercised profitably.
• D) is out of the money and can be exercised profitably.
• E) is in the money and can be exercised profitably.

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Definitions:

Inefficient Levels

Situations where resources are not being used in the best possible way from an economic perspective, leading to potential waste or losses.

Opportunity Cost

Foregoing the prospective advantages from various other alternatives by making a single selection.

Opportunity Cost

The expense related to overlooking the next in line preferable option in the course of decision-making.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, effectively representing the benefits you miss out on choosing one option over another.