Question 44, You hold a call option on Pear Corp.'s common stock. The call option has a strike price of $81 per share (a total strike price of $8,100), with a maturity date 1 year into the future. The option is exercisable at any time on or before the maturity date. Which of the following is true if you exorcise the option when Pear Corp.'s common stock is trading at $90 per share? (A) The market price is $9,000, you lose $900, and the option is out-of-the-money. (B) The market price is $9,000, you make $900, and the option is out-of-the-money. (C) The market price is $9,000, you lose $900, and the option is in-the-money. (D) The market price is $9,000, you make $900, and the option is in-the-money. (E) None of the aboye
Question 44, You hold a call option on Pear Corp.'s common stock. The call option has a strike price of $81 per share (a total strike price of $8,100), with a maturity date 1 year into the future. The option is exercisable at any time on or before the maturity date. Which of the following is true if you exorcise the option when Pear Corp.'s common stock is trading at $90 per share? (A) The market price is $9,000, you lose $900, and the option is out-of-the-money. (B) The market price is $9,000, you make $900, and the option is out-of-the-money. (C) The market price is $9,000, you lose $900, and the option is in-the-money. (D) The market price is $9,000, you make $900, and the option is in-the-money. (E) None of the aboye
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question 44.
You hold a call option on Pear Corp.'s common stock. The call option has a strike price of $81
per share (a total strike price of $8,100), with a maturity date 1 year into the future. The option is
exercisable at any time on or before the maturity date,
Which of the following is true if you exercise the option when Pear Corp.'s common stock is
trading at $90 per share?
(A) The market price is $9,000, you lose $900, and the option is out-of-the-money.
(B) The market price is $9,000, you make $900, and the option is out-of-the-money.
(C) The market price is $9,000, you lose $900, and the option is in-the-money.
(D) The market price is $9,000, you make $900, and the option is in-the-money.
(E) None of the above.
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