A PUT and a CALL option are wr

A PUT and a CALL option are written on a stock with a strike price of $60. The options are held until expiration.

17. Calculate the breakeven stock price for the CALL option if the premium is $16. What
is the time value of the call?
a) $63; $1
b) $57; $0
c) $76; $16
d) $55; $3
e) $76; $1
f) None of the above

18. Suppose the stock price at expiration is $75. Call premium is $16. The CALL option
WRITER’S profit would be:
a) -$3
b) $3
c) -$15
d) $15
e) None of the above

19. Suppose the stock price at expiration is $75. Call premium is $16 and Put premium is
$3. The CALL option will ___ because the call is ___. But the PUT option will ___
because the put is ___, with a TIME VALUE of ___.
a) Be exercised; in-the-money; not be exercised; out-of-the-money; zero
b) not be exercised; out-of-the-money; be exercised; in-the-money; zero
c) Be exercised; in-the-money; not be exercised; out-of-the-money; 1
d) Be exercised; in-the-money; be exercised; in-the-money; zero
e) None of the above is correct

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