Deeble Construction Co

question 30

Multiple Choice

Deeble Construction Co.'s stock is trading at $30 a share.There are also call options on the company's stock,some with an exercise price of $25 and some with an exercise price of $35.All options expire in 3 months.Which of the following best describes the value of these options?

• A) If Deeble's stock price rose by $5,the exercise value of the options with the $25 exercise price would also increase by $5.
• B) The options with the $25 exercise price will sell for less than the options with the $35 exercise price.
• C) The options with the $25 exercise price have an exercise value greater than $5.
• D) The options with the $35 exercise price have an exercise value greater than $0.
• E) The options with the $25 exercise price will sell for $5.

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Definitions:

Imitation

The action of using someone or something as a model and attempting to replicate their behavior, actions, or attributes.

Operant Conditioning

A teaching mechanism in which the intensity of an action is altered through positive reinforcement or negative consequences.

Classical Conditioning

An educational method where a response becomes conditioned by pairing an external trigger with an inherently occurring trigger, resulting in conditioned behavior.

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