Underlying Stock Price: 25 You Want to Purchase One

question 6

Multiple Choice

Underlying stock price: 25 You want to purchase one February call option contract on the stock. The contract with a $20 exercise price will cost you ________. (Ignore transactions costs.)

• A) $100
• B) $200
• C) $500
• D) $600
• E) $700

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Definitions:

Primary Market

The market segment at which a company's products or services are primarily aimed, often defined by demographics such as age, gender, or income.

Interest Rate

The percentage of an amount of money charged for its use over a specified period of time, typically expressed on an annual basis.

Credit Unions

Cooperative financial institutions owned and controlled by their members, providing savings accounts, loans, and other financial services to members.

Depository Financial Institution

A financial institution legally allowed to accept monetary deposits from consumers, such as banks and credit unions.