Deeble Construction Co

question 2

Multiple Choice

Deeble Construction Co.'s stock is trading at $30 a share.Call options on the company's stock are also available,some with a strike price of $25 and some with a strike price of $35.Both options expire in 3 months.Which statement regarding the value of these options is true?

• A)The options with the $25 strike price will sell for less than the options with the $35 strike price.
• B)The options with the $25 strike price have an exercise value greater than $5.
• C)The options with the $35 strike price have an exercise value greater than $0.
• D)If Deeble's stock price rose by $5, the exercise value of the options with the $25 strike price would also increase by $5.

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Definitions:

Negligence

A failure to behave with the level of care that someone of ordinary prudence would have exercised under the same circumstances, resulting in harm or damage.

Defenses

Legal strategies and arguments used in court to justify or excuse an individual's actions or to challenge the validity of a lawsuit.

Securities Act

A federal piece of legislation enacted in 1933 that regulates the offer and sale of securities to protect investors from fraud.

Controlling Person

An individual or entity that has the power to direct or influence the management and policies of a company, typically through ownership of a significant portion of voting shares.