What Is the Option Buyer's Total Profit or Loss Per

question 109

Multiple Choice

What is the option buyer's total profit or loss per share if a call option is purchased for a $5 premium, has a $50 exercise price, and the stock is valued at $53 at expiration?

• A) -$5
• B) -$2
• C) $3
• D)$8

Explore the reasons behind individual conformity, including the desire to be liked, correctness, and fear of isolation.

Examine the effects of situational variables on obedience, including the proximity of authority figures and the victim.

Understand the concept of authoritarian personality and its correlation with obedience and political orientation.

Understand the concept of economic profits and losses in perfectly competitive industries.

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Definitions:

After-Tax Cost

After-Tax Cost is the expense associated with a transaction or activity, taking into account the effect of income tax deductions or liabilities.

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary according to income or profit levels.

Cost of Debt

The cost of debt is the effective rate that a company pays on its total debt, used in capital structuring decisions to evaluate the affordability of borrowing.

Dividend Growth Model

A model that estimates the value of a stock based on its expected dividends and their growth rate.