Josh Owns 2 Call Options on Foster Glass Stock

question 63

Multiple Choice

Josh owns 2 call options on Foster Glass stock. The exercise price is $47.50 and the stock price at expiration is $49.01. What is the total payoff on the option contracts?

• A)$0
• B)−$3.02
• C)$3.02
• D)$30.20
• E)$302.00

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Definitions:

Incubation

The process in problem-solving where an individual sets the problem aside for a while, allowing the subconscious to work on it.

Verification

The process of confirming the truth, accuracy, or validity of something, often involving the examination of evidence or conducting tests.

Satisficing

A decision-making strategy that entails choosing an option that meets a minimum level of satisfaction, rather than the optimal solution, due to constraints such as limited information or time.

Prospect Theory

A behavioral economic theory that describes how people make decisions between alternatives that involve risk, where the potential for losses influences choices more than equivalent gains.