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The Current Market Value of a Stock Option Contract to Purchase

Question 231

Multiple Choice

The current market value of a stock option contract to purchase 1,000 shares of IBM stock at a price of $100 that can be exercised five years from now would


A) increase if the expected future price of IBM stock rose.
B) increase if the expected future price of IBM stock fell.
C) decrease if the expected future price of IBM stock rose.
D) remain unchanged regardless of the expected future price of IBM stock.

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