Cazden Motors' Stock Is Trading at $30 a Share

question 23

Multiple Choice

Cazden Motors' stock is trading at $30 a share.Call options on the company's stock are also available, some with a strike price of $25 and some with a strike price of $35.Both options expire in three months.Which of the following best describes the value of these options?

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

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Definitions:

Win-win

describes a situation or outcome where all parties involved benefit or are satisfied with the resolution.

Concessions

Negotiations or compromises made by resolving parties to reach an agreement.

Time Deadlines

Specific, predetermined dates or times by which tasks or projects must be completed.

Negotiations

The process of discussing terms to reach a mutual agreement between parties.