Once the Call Premium Is Recouped, the Profit from a Call

question 75

True/False

Once the call premium is recouped, the profit from a call is only limited by the price increases of the underlying stock prior to the contract expiration.

---

Definitions:

Cash Dividends

Payments made by a company to its shareholders out of its profits or reserves.

Originally Issued

Refers to securities that have been sold for the first time to investors directly by the issuing company.

Paid-In Capital in Excess of Par

The amount of capital contributed by shareholders over and above the par value of the shares issued.

Common Stock

A form of corporate equity ownership, a type of security representing an ownership share in a corporation, giving holders voting rights and a share in the company's profits via dividends.