The Common Stock of Mercury Motors Is Selling for $43

Multiple Choice

The common stock of Mercury Motors is selling for $43.90 a share. Treasury bills are currently yielding 4.5 percent. What is the current value of a one-year call option on Mercury Motors stock if the exercise price is $37.50 and you assume the option will finish in the money?

A) $6.12
B) $6.40
C) $6.69
D) $7.67
E) $8.01