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Steve owns an option that grants him the right to purchase shares of LK Tool stock at $45 a share. Currently, the stock is selling for $52.40 a share. Steve would like to realize his profits but is not permitted to exercise the option for another two weeks. Which one of the following does Steve own?A) Straight bondB) American callC) American putD) European callE) European put

Respuesta :

Answer: European call

Explanation:

From the question, we are informed that Steve owns an option that grants him the right to purchase shares of LK Tool stock at $45 a share and that currently, the stock is selling for $52.40 a share but Steve isn't allowed to exercise the option for another two weeks.

This show that Steve owns an European call. For an European call, the investor can only sell,l an asset at a particular date and not just anytime.

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