An investor purchases a call option with an exercise price of $55 for $2.60. The same investor sells a call on the same security with an exercise price of $60 for $1.40. At expiration, 3 months later, the stock price is $56.75
All other things being equal and given an annual interest rate of 4.0%, what is the net profit or loss to the investor?
A) $1.21 loss
B) $1.50 loss
C) $0.54 gain
D) $1.65 gain
C
You might also like to view...
If a firm consolidates subsidiaries that are not wholly owned, an income statement item is created that is termed:
a. dividend income. b. minority share of earnings. c. equity income. d. extraordinary. e. gain from sale of subsidiary.
We can lead ourselves to the most desired accomplishments by:
a. focusing on thinking patterns (mental) b. focusing on physical action (behavior) c. combining both the mental and physical level of influence d. not focusing on either of these
Preparation of the statement of cash flows does not involve:
A. Computing and reporting net cash provided or used by investing activities. B. Computing the profit compared to the net increase or decrease in cash. C. Computing the net increase or decrease in cash. D. Computing and reporting net cash provided or used by operations. E. Computing and reporting net cash provided or used by financing activities.
Tatia, age 38, has made deductible contributions to her traditional IRA over the past few years. When her account balance was $32,000, she transferred the entire $32,000 out of her traditional IRA and immediately into a Roth IRA. Her current marginal tax rate is 25 percent. What amount of tax and penalty is she required to pay on this rollover?
What will be an ideal response?