A European Call on OPSY Stock with a Strike Price

question 10

Multiple Choice

A European call on OPSY stock with a strike price of $22.50 is worth $1.75.Let the present value of the strike price be $22.25.A European put on the stock with identical terms is worth the same.If the price of OPSY stock is $22,the arbitrage profit that you can create today by trading the stock and other related securities is:

• A) $0.25
• B) $0.50
• C) $0.75
• D) $1
• E) None of these answers are correct.

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Definitions:

Marginal Benefit

The further enjoyment or utility obtained when one more unit of a product or service is consumed.

Pollution

The existence or entry of a harmful or toxic material or object into the environment.

Polluters

Individuals or entities that introduce pollutants or contaminants into the environment, causing pollution.

Environmental Standards

Regulations and criteria set by governmental bodies or international organizations to protect the environment and human health by limiting pollution and managing natural resource use.