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:

Long-Term Debt

Borrowings and financial obligations lasting over one year, used to finance operations or acquisitions.

Capital Budgeting

The method by which a business analyzes prospective large-scale projects or investments.

Borrowing Power

The maximum amount of money a person or entity can borrow based on their financial situation.

Discount Rate

Discount Rate is the interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.