Suppose XYZ Is Priced at $125 a Share,has a Call

question 81

Essay

Suppose XYZ is priced at $125 a share,has a call with an exercise price of $150,has two months to expiration,and costs $0.125 per contract. Why do you suppose investors would be willing to purchase a call that is so far out of the money?

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Definitions:

Recentering

Process that underlies the shift to an adult identity.

Recentering Process

A developmental shift, typically occurring in young adulthood, where individuals transition their primary concern from their family of origin to their own life course and significant relationships.

Part-Time Job

Employment with fewer hours per week than a full-time position, often offering flexibility but with reduced benefits and pay.

Emerging Adulthood

Proposed transitional period between adolescence and adulthood commonly found in industrialized countries.