Exhibit 20 $\$ 3.25$ Premium
-Refer to Exhibit 20

question 99

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
-Refer to Exhibit 20.4.Assuming no commissions or taxes,what is the annualized percentage gain if the stock is at $30 in four months and the stock was purchased?

• A) 9.54% loss
• B) 95.45% loss
• C) 0.9545% gain
• D) 95.45% gain
• E) 9.54% gain

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Definitions:

Triarchic Theory

A theory of intelligence proposed by Robert Sternberg, which suggests that human intelligence comprises three aspects: analytical, creative, and practical intelligence.

Sternberg

Refers to Robert Sternberg, an American psychologist who proposed the triarchic theory of intelligence which includes analytical, creative, and practical aspects.

Intelligence

The ability to acquire, understand, and use knowledge, including the capacity for logic, understanding, self-awareness, learning, emotional knowledge, planning, creativity, and problem-solving.

Understand the World

The process of comprehending or making sense of the environment and society around one.