You Know for Certain That a Common Share of Mystical

question 14

Multiple Choice

You know for certain that a common share of Mystical Inc., worth $25 today, will be worth $55 one month from now. The stock pays no dividends. Which of the following actions would maximize your return on investment (assuming no transaction costs) ?

• A) Purchase a call option with a strike price of $55.
• B) Purchase warrants on the stock (totaling 100 shares) with a strike price of $35.
• C) Purchase a put option on the stock with a strike price of $30.
• D) Purchase 100 shares of the stock at the current price of $25 per share.
• E) Purchase a call option on the stock with a strike price of $25.

---

Definitions:

Consumer Behavior

The examination of how individuals, groups, or organizations choose, acquire, consume, and discard products, services, experiences, or concepts to fulfill their needs, and how these actions affect both the consumer and the broader community.

Traditional Market System

An economic system where trade and economic activities are based on customs, history, and time-honored beliefs.

Marginal Utility

A concept in economics that represents the additional satisfaction or utility a consumer gains from consuming one more unit of a good or service.

Budget Allocation

The process of distributing available financial resources among different departments, projects, or sectors within an organization or government.