Block Corp 40 Call Option Is Selling for $6 and the Common

question 61

Multiple Choice

Block Corp 40 call option is selling for $6 and the common stock is selling for $41,the intrinsic value is.

• A)$6 and the speculative premium is $1
• B)$1 and the speculative premium is $5
• C)$1 and the speculative premium is $7
• D)$5 and the speculative premium is $7

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Definitions:

Demand for Good

Demand for good refers to the quantity of a product or service that consumers are willing and able to purchase at various prices during a given period.

Equilibrium Quantity

Equilibrium quantity is the quantity of goods or services supplied and demanded at the equilibrium price, where the quantity demanded equals the quantity supplied, leading to market stability.

Demand Decreases

A situation where the desire or need for a product or service declines, often leading to lower prices and adjustments in supply.

Supply Increases

Occurs when the quantity of a good or service that a market can offer rises.