B) False
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A) The price of the call option will increase by more than $2.
B) The price of the call option will increase by less than $2, and the percentage increase in price will be less than 10%.
C) The price of the call option will increase by less than $2, but the percentage increase in price will be more than 10%.
D) The price of the call option will increase by more than $2, but the percentage increase in price will be less than 10%.
E) The price of the call option will increase by $2.
G) A) and E)
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A) The higher the strike price on XYZ's options, the higher the option's price will be.
B) Assuming the same strike price, an XYZ call option that expires in one month will sell at a higher price than one that expires in three months.
C) If XYZ's stock price stabilizes (becomes less volatile) , then the price of its options will increase.
D) If XYZ pays a dividend, then its option holders will not receive a cash payment, but the strike price of the option will be reduced by the amount of the dividend.
E) The price of these call options is likely to rise if XYZ's stock price rises.
G) C) and D)
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A) $2.81
B) $3.12
C) $3.47
D) $3.82
E) $4.20
G) D) and E)
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A) $7.33
B) $7.71
C) $8.12
D) $8.55
E) $9.00
G) All of the above
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Correct Answer
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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 Cazden's stock price rose by $5, the exercise value of the options with the $25 strike price would also increase by $5.
E) The options with the $25 strike price will sell for $5.
G) A) and D)
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A) Call options give investors the right to sell a stock at a certain strike price before a specified date.
B) Options typically sell for less than their exercise value.
C) LEAPS are very short-term options that were created relatively recently and now trade in the market.
D) An option holder is not entitled to receive dividends unless he or she exercises their option before the stock goes ex dividend.
E) Put options give investors the right to buy a stock at a certain strike price before a specified date.
G) None of the above
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A) $2.43
B) $2.70
C) $2.99
D) $3.29
E) $3.62
G) A) and E)
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