Dexter Decides to Buy a New Smartphone and Offset the Cost

question 122

Multiple Choice

Dexter decides to buy a new smartphone and offset the cost by selling his old phone to one of his friends.His friend has no money and wants to barter for the old phone.Dexter's preference for the items offered is in this order: laser printer,television,headphones,and bicycle.If Dexter accepts the laser printer as payment,what is his opportunity cost of this exchange?

• A) the total value of the television,headphones,and bicycle
• B) the difference between the value of the old phone and that of the new smartphone
• C) There is no opportunity cost in a consensual trade.
• D) the value of the laser printer
• E) the value of the television

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Definitions:

Calls

Calls are options contracts giving the holder the right, but not the obligation, to buy a specified amount of an underlying security at a predetermined price within a specified time frame.

Option Quotes

Information about the price of an option contract, including its bid and ask prices, and sometimes the volume and open interest.

Warrants

Financial derivatives that give the right, but not the obligation, to buy or sell a security—mostly equity—at a certain price before expiration.

Listed Call Options

Financial derivatives traded on exchanges that give the buyer the right, but not the obligation, to buy a stock at a specified price within a certain time frame.