Exhibit 20 $\$ 3.25$ Premium
-Tom Gettback Buys 100 Shares of Johnson Walker Stock

question 91

Multiple Choice

Exhibit 20.4
Use the Information Below for the Following Problem(S)
Rick Thompson is considering the following alternatives for investing in Davis Industries which is now selling for $44 per share:
(1) Buy 500 shares, and
(2) Buy six month call options with mexercise price of 45 for $\$ 3.25$ premium
-Tom Gettback buys 100 shares of Johnson Walker stock for $87.00 per share and a 3-month Johnson Walker put option with an exercise price of $105.00 for $20.00.What is his dollar gain if at expiration the stock is selling for $80.00 per share?

• A) $200 loss
• B) $700 loss
• C) $200 gain
• D) $700 gain
• E) None of the above

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Definitions:

Usury Laws

Regulations governing the maximum interest rates that can be charged on loans, intended to protect consumers from excessively high rates.

Usury Law

Legislation that sets the maximum interest rates that can be charged on loans, intended to protect consumers from excessively high rates.

Quantity of Money

The total amount of money (currency, coins, and checking deposits) in circulation within an economy.

Usury Law

Legislation that sets maximum interest rates that can be charged on loans to protect consumers from excessively high rates.