A Call Option on a Stock Has an Exercise Price

question 26

Multiple Choice

A call option on a stock has an exercise price of $12.15.If the stock price at expiration is $11,what is the option payoff for a short call position?

• A)$-11
• B)$11
• C)$1.15
• D)-$1.15
• E)$0

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Definitions:

Equity Method

An accounting technique used to record investments in associated companies.

Fixed Assets

Long-term tangible assets used in a company's operations, such as buildings, machinery, and equipment, which are not typically sold in the course of business.

Income Statement

A financial document that shows a company's revenues, expenses, and net income over a specific period.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time.