The Spot Price of the Market Index Is $900

question 12

Multiple Choice

The spot price of the market index is $900. The annual rate of interest on treasuries is 4.8% (0.4% per month) . After 3 months the market index is priced at $920. An investor has a long call option on the index at a strike price of $930. What profit or loss will the writer of the call option earn if the option premium is $2.00?

• A) $2.00 gain
• B) $2.00 loss
• C) $2.02 gain
• D) $2.02 loss

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Definitions:

S-Cams

Components used in drum brakes, shaped like an "S", which turn and push brake shoes out against the drum to stop a vehicle.

Linear Force

A force that acts in a straight line, applying push or pull in a single direction to move or support objects.

FMVSS 121

A U.S. Federal Motor Vehicle Safety Standard pertaining to the performance and design requirements for air brake systems in heavy trucks and buses.

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