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Deeble Construction Co.'s stock is trading at $30 a share. Call options on the company's stock are ...

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Deeble Construction Co.'s stock is trading at $30 a share. Call options on the company's stock are ...

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?

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The options with the $25 strike price will sell for less than the options with the $35 strike price.

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The options with the $25 strike price have an exercise value greater than $5.

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The options with the $35 strike price have an exercise value greater than $0.

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If Deeble's stock price rose by $5, the exercise value of the options with the $25 strike price would also increase by $5.

Textbook

Financial Management: Theory and Practice

Edition: 4^th

Authors: Brigham, Ehrhardt, Gessaroli, Nason

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