Suppose you believe that Basso Inc.'s stock price is going to increase from its current level of $22.50 sometime during the next 5 months. For $3.10 you can buy a 5-month call option giving you the right to buy 1 share at a price of $25 per share. If you buy this option for $3.10 and Basso's stock price actually rises to $45, what would your pre-tax net profit be?
A. ?$3.10
B. $16.90
C. $17.75
D. $22.50
E. $25.60
Answer: B
You might also like to view...
The marketing concept takes a(n) ________. It starts with a well-defined market, focuses on customer needs, and integrates all the marketing activities that affect customers
A) outside-in perspective B) product-centered make-and-sell philosophy C) inside-out perspective D) consumer-generated marketing approach E) telling-and-selling approach
Sky Pioneers Inc. manufactures airplane parts. It wants to globalize and is willing to spend a considerable amount to protect its intellectual property. Which of these business ventures makes the most sense for Sky Pioneers?
A. licensing some of its newest designs to overseas competitors B. exporting airplane parts to many other countries C. acquiring an airplane-parts manufacturer in another country D. beginning a brownfield project in its home country
If the stock market becomes more risky (e.g. there is greater uncertainty about the economy), the beta of the market portfolio increases
Indicate whether the statement is true or false
In regression analysis, the response variable is the
A. independent variable. B. dependent variable. C. slope of the regression function. D. intercept.