An Investor Purchases a Call Option in a Stock That

question 70

Multiple Choice

An investor purchases a call option in a stock that is currently selling for $50 per share on January 3, 2016. He pays $6 per share for the option with an exercise price of $57 and an expiration date of April 17, 2016. On April 16, 2016 the stock is selling for $58 and the investor exercises the option and immediately sells the stock. How much total gain or loss did the investor realize?

• A) - $500
• B) $100
• C) Breakeven
• D) $700

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Definitions:

Corporate Bonds

Debt securities issued by corporations to raise capital, promising to repay the principal along with interest.

Retirement Program

A financial plan or fund that provides individuals with income or benefits upon retirement, often including savings, investment plans, or government pensions.

Diverse Set

A collection consisting of various distinct elements or individuals.

Rate Of Return

The percentage gain or loss on an investment relative to the amount of money invested.