What Action Would the Holder of a Maturing Call Option

question 38

Multiple Choice

What action would the holder of a maturing call option take if an option which cost $300, had a strike price of $50, and the market value of the stock was $52?

• A) let the option expire unexercised
• B) exercise the option
• C) request that the $300 be returned
• D) none of the above

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Definitions:

Accounts Receivable

The money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Collateral

Collateral is an asset that a borrower offers to a lender to secure a loan. If the borrower fails to repay the loan, the lender has the right to seize the collateral.

Line of Credit Agreement

A legal agreement between a financial institution and a borrower that establishes a maximum loan balance that the lender allows the borrower to access.

Specified Period

A defined duration or timeframe during which certain actions, events, or conditions are intended to take place or be in effect.