The price of a stock on July 1 is $57 . A trader buys 100 call options on the stock with a strike price of $60 when the option price is $2 . The options are exercised when the stock price is $65 . The trader's net profit is
A. $700
B. $500
C. $300
D. $600
C
The payoff from the options is 100×(65-60) or $500 . The cost of the options is 2×100 or $200 . The net profit is therefore 500−200 or $300.
You might also like to view...
Which of the following statements regarding fringe benefits is false?
A. Nontaxable fringe benefits must be provided to employees on a nondiscriminatory basis. B. The general rule is that an employee fringe benefit is taxable unless the benefit is specifically excluded from the employee's gross income. C. Employers are not allowed to deduct the cost of nontaxable employee fringe benefits. D. None of the above is false.
A plant asset is fully depreciated when the book value is ________
A) greater than the residual value B) greater than the market value C) equal to the residual value D) equal to the market value
The use of multiple distribution channels that complement organizations' brick-and-mortar stores with websites, catalogs, and apps where consumers can research products, read other buyers' reviews, and make actual purchases is known as
A. multichannel retailing. B. dual retailing. C. multimedia retailing. D. dual distribution. E. multi-wholesaling.
________ is one of the two principles of Kantian ethics according to which the actor must abide by the rule he or she uses to judge the morality of someone else's conduct.
A. Consistency B. Reversibility C. Irreversibility D. Inconsistency