Smith Enterprises Stock Currently Sells for $17

question 53

Multiple Choice

Smith Enterprises stock currently sells for $17.50.A put option on the stock has a strike price of $20 and currently sells at $4.50.What is the intrinsic value of the option?

• A) $0
• B) $2.50
• C) $2.00
• D) $4.50

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Definitions:

Taxed Without Consent

The imposition of taxes on individuals or businesses without their agreement or representation, often considered unjust.

Stamp Act

A law enacted by the British Parliament in 1765 requiring American colonists to pay a tax on every piece of printed paper they used, which was a contributing factor to the American Revolution.

East India Company

A historical English company formed for the exploitation of trade with East and Southeast Asia and India, incorporated by royal charter in 1600.

Boston Tea Party

The incident on December 16, 1773, in which the Sons of Liberty, dressed as Indians, dumped hundreds of chests of tea into Boston Harbor to protest the Tea Act of 1773. Under the Tea Act, the British exported to the colonies millions of pounds of cheap—but still taxed—tea, thereby undercutting the price of smuggled tea and forcing payment of the tea duty.