The Premium on a Euro Call Option Is

question 135

Multiple Choice

The premium on a euro call option is $.02. The exercise price is $1.32. The break-even point is ____ for the buyer of the call, and ____ for the seller of the call. (Assume zero transactions costs and that the buyer and seller of the put option are speculators.)

• A) $1.30; $1.30
• B) $1.34; $1.30
• C) $1.30; $1.34
• D) $1.34; $1.34

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Definitions:

Fixed Number

A quantity that remains constant and does not change or vary in a given context.

Varying Amounts

Different quantities or measures of something without a fixed or exact number.

Stimulus Generalization

The process by which conditioned responses are triggered by stimuli that are similar, but not identical to, the original conditioned stimulus used during learning.

Discrimination

The act of treating people unequally based on characteristics such as race, age, or sex, resulting in prejudice.