A Stock Currently Trades at $110

question 6

Multiple Choice

A stock currently trades at $110. June call options on the stock with a strike price of $120 are priced at $5.75. Calculate the dollar return on one call contract.

• A) -$1000
• B) $1000
• C) $575
• D) -$575
• E) $0

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Definitions:

Relevance

The quality of information that makes it useful for decision-making by accurately reflecting the financial situation of a business.

Representational Faithfulness

The quality of financial information that ensures it accurately reflects an entity's transactions and events without error or bias.

Financial Reporting

Generating financial statements that provide insight into an organization's economic status to its overseers, stakeholders, and governmental authorities.

Accounting Period

A specific duration of time used for financial reporting, usually a fiscal year or quarter.