Which of the Following Combinations Will Create an In-The-Money Option

question 117

Multiple Choice

Which of the following combinations will create an in-the-money option?
I. Call: exercise price > current stock price
II. Call: exercise price < current stock price
III. Put: exercise price > current stock price
IV. Put: exercise price < current stock price

• A) I
• B) III
• C) II and IV
• D) I and IV
• E) II and III

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Definitions:

Ice Cream

A sweetened frozen food typically eaten as a snack or dessert, made from dairy products or other ingredients and flavors.

Marginal Utility

The extra satisfaction or usefulness gained from consuming or acquiring one more unit of a product or service.

Ties

Articles of clothing, typically narrow strips of fabric worn around the neck under the collar, primarily by men for decorative purposes.

Shirts

Pieces of clothing for the upper body, typically with sleeves and a front opening, made for both genders.