When the Exercise Price of a Call Option Is Higher

question 15

Multiple Choice

When the exercise price of a call option is higher than the current share price, the option is said to be

• A)at-the-money.
• B)in-the-money.
• C)out-of-the-money.
• D)None of the above.

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Definitions:

Import Quota

A government-imposed limit on the quantity of a specific type of good that can be imported into a country over a set period of time.

Protective Tariff

A tariff imposed by a country on imported goods to protect domestic industries from foreign competition by making imported goods more expensive.

Export Subsidy

A government policy to encourage export of goods and discourage sale within the domestic market through direct payments, tax relief for exporters, or subsidizing part of the cost.

Voluntary Export Restriction

An agreement between exporting and importing countries where the exporter voluntarily limits the quantity of goods exported to avoid stronger restrictive measures.