Final answer:
The cost of buying 10 January 2009 call options on Merck would be $3000. To determine if the contracts are in or out-of-the-money, compare the exercise price with the current stock price.
Step-by-step explanation:
To calculate the cost of buying 10 January 2009 call options on Merck, you need to consider the premium or price of each option. Let's assume the premium is $3 per share. Since each option represents 100 shares, the cost per option would be $3 * 100 = $300. Therefore, the total cost of buying 10 options would be $300 * 10 = $3000.
To determine if these contracts are in- or out-of-the-money, you need to compare the exercise price ($45) with the current price of the stock. If the current stock price is higher than the exercise price, the contracts are in-the-money. If the current stock price is lower, the contracts are out-of-the-money.
In this case, you would need to compare the current price of Merck stock to $45 to determine if the contracts are in- or out-of-the-money.