Suppose That a Stock Sells at a Price of $10

question 95

Multiple Choice

Suppose that a stock sells at a price of $10 on the expiration date. Compute the price of a call option if the option strike price is $20.

• A) $20
• B) $30
• C) $40
• D) $0

---

Definitions:

Total Cost Function

An equation that shows the overall cost incurred by a firm in the production process, including both fixed and variable costs, as a function of the quantity of output produced.

Fixed Cost

Business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, and insurance premiums.

Price Elastic

describes the responsiveness of the quantity demanded of a good to a change in its price.

Industry Supply

The total quantity of a product or service that is available for purchase in a specific industry at a given price and time.