Suppose That in June 2013 You Bought a Call Option

question 188

Multiple Choice

Suppose that in June 2013 you bought a call option that allows you to buy 100 shares of a certain stock for $20 before October 2013. If the market price of the stock at some point before October 2013 is $23, and you exercise your option, what will happen?

• A) You will make a $30.00 profit.
• B) You will make a $300.00 profit.
• C) You will make a $3000.00 profit.
• D) You will incur a loss of $30.00.
• E) You will incur a loss of $300.00.

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Definitions:

Biological Conditions

Physical states that affect the function and behavior of organisms, often relating to health and disease states.

Drive Reduction Theory

A motivational theory that argues the primary goal of all behavior is the reduction of drives, which are basic bodily needs.

Motivation

The method that starts, steers, and sustains behaviors aimed at achieving goals.

Reinforcement Value

The degree to which a specific outcome or reward increases the likelihood of a behavior occurring again.