You Purchased Six TJH Call Option Contracts with a Strike

question 26

Multiple Choice

You purchased six TJH call option contracts with a strike price of €40 when the option was quoted at €1.30.The option expires today when the value of TJH is €41.90.Ignoring trading costs and
Taxes, what is your total profit or loss on your investment?

• A)€60
• B)€320
• C)€360
• D)€420
• E)€540

Grasp the concept of ownership equity and how it relates to assets and liabilities.

Comprehend the different types of business organizations and their characteristics, including corporations.

Recognize the different categories of company liabilities.

Understand how business transactions affect the accounting equation.

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Definitions:

Unlevered Value

Unlevered value is the value of a company or investment assuming it has no debt financing, focusing solely on its equity value.

Tax Rate

The proportion of financial income that is taxed from either a person or a corporate body.

Unlevered Rate

A financial metric that measures the return on investment without considering the impact of financial leverage.

Absolute Priority Rule

A principle in bankruptcy proceedings that senior creditors are paid in full before junior creditors and equity holders receive any payment.