The Price of ABC Shares Is Currently $42 Per Share

question 49

Multiple Choice

The price of ABC shares is currently $42 per share, but in six months you expect it to rise to $50. ABC does not pay a dividend. You buy a six- month call on ABC, with a strike price of $45. The option cost $200. What holding period return do you expect on this call? Ignore transaction costs and taxes.

• A) 200%.
• B) 150%.
• C) 250%.
• D) 300%.

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Definitions:

Phenothiazines

A class of antipsychotic drugs used to treat mental health conditions by affecting neurotransmitter activity in the brain, with a historical significance in the treatment of schizophrenia.

Chlorpromazine

Antipsychotic drug.

Cognitive Strategy

Techniques or methods employed to improve mental processes such as learning, memory, problem-solving, and decision-making.

Delusional Beliefs

Firmly held convictions despite strong evidence to the contrary, often a symptom of psychiatric disorders.