[kanishae]

Warnes Motors' stock is trading at $20 a share. Three-month call options with an exercise price of $20 have a price of $1.50. Which of the following will occur if the stock price increases 10% to $22 a share?

a. The price of the call option will increase by $2.
b. The price of the call option will increase by less than $2, but the percentage increase in price will be more than 10%
c. The price of the call option will increase by less than $2, and the percentage increase in price will be less than 10%
d. The price of the call option will increase by more than $2.
e. The price of the call option will increase by more than $2, but the percentage increase in price will be less than 10%.

[bryanhallman]

B

[morgaine300]

We are not here just to answer your homework problems for you. You should make some attempt to do the problem and tell us what you think the answer might be - and with multiple choice, why. Then someone can help you.

Bryan, please do not attempt to just answer people's homework for them. It's their work.