Suppose the price of a share of Google stock is $500.An April call option on Google stock has a premium of $5 and an exercise price of $500.Ignoring commissions, the holder of the call option will earn a profit if the price of the share
A)increases to $504.
B)decreases to $490.
C)increases to $506.
D)decreases to $496.

Question

Quizplus · Accepted Answer

For the holder of the call option to earn a profit, the price of the share must exceed the sum of the exercise price ($500) and the premium paid for the option ($5), which totals $505. Therefore, a share price increase to $506 would result in a profit.

Suppose the Price of a Share of Google Stock Is