You Own a Call Option on Jasper Co

question 33

Multiple Choice

You own a call option on Jasper Co. stock that expires in one year. The exercise price is $42.50. The current price of the stock is $56.00 and the risk-free rate of return is 3.5%. Assume that the option will finish in the money. What is the current value of the call option?

• A) $13.04
• B) $13.50
• C) $13.97
• D) $14.94
• E) $15.46

---

Definitions:

Mutual Agency

A principle of partnership where each partner is both an agent and a principal, legally authorized to make business decisions and transactions that can bind the partnership.

Business Operations

Activities involved in the day-to-day functions of a business related to producing and delivering products or services.

Unlimited Liability

A legal structure in which owners are personally and fully responsible for all debts and liabilities incurred by the business.

Personal Assets

Assets owned by an individual as opposed to those owned by businesses or governments, including tangible and intangible items.