A Share Sells for $40, and Its Call Option Sells

question 62

Multiple Choice

A share sells for $40, and its call option sells for $4. The hedge ratio is .8 and the share price rises by 10%. The call option price should

• A) fall by 20%.
• B) rise by 80%.
• C) rise to $4.80.
• D) fall by $3.20.

---

Definitions:

Creative Problem Solvers

Individuals who employ novel and resourceful methods to find solutions to complex problems.

Realistic Goals

Objectives that are attainable and practical, taking into account current resources and constraints.

Set

A collection of distinct objects, considered as a whole, often grouped together because they share common characteristics.

Collaborate

To work jointly with others or together especially in an intellectual endeavor.