Hall, Inc, Enters into a Call Option Contract with Bennett Investment

question 53

Multiple Choice

Hall, Inc., enters into a call option contract with Bennett Investment Co. on January 2, 2011. This contract gives Hall the option to purchase 1,000 shares of WSM stock at $100 per share. The option expires on April 30, 2011. WSM shares are trading at $100 per share on January 2, 2011, at which time Hall pays $100 for the call option.
Using the information above, the 1,000 shares of WSM stock in this contract is referred to as the

• A) collateral.
• B) notional amount.
• C) option premium.
• D) derivative.

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