Today, You Are Buying a One-Year Call on One Share

question 255

Multiple Choice

Today, you are buying a one-year call on one share of XYZ stock with a strike price of $35 along with a one-year risk-free asset which pays 5 percent interest. The cost of the call is $1.60 and the
Amount invested in the risk-free asset is $33.33. How much profit will you earn if the stock has a
Market price of $37 one year from now?

• A) $2.07
• B) $2.11
• C) $2.16
• D) $2.29
• E) $2.31

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Definitions:

Maslow

Abraham Maslow, a psychologist known for creating Maslow's hierarchy of needs, which is a theory of psychological health predicated on fulfilling innate human needs in priority, culminating in self-actualization.

Unconscious Fixations

Deeply held impulses or patterns of thought rooted in one's subconscious mind, influencing behavior or attitudes.

Unresolved Conflicts

Issues or disagreements that have not been successfully addressed, leading to ongoing tension or distress.

Sigmund Freud

An Austrian neurologist known for founding psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychoanalyst.