Suppose You Purchase a Call Option for $5 and a Strike

question 97

Multiple Choice

Suppose you purchase a call option for $5 and a strike price of $40.On the expiration day,the price of the stock is $55.What is the return on the call option if you hold your position until maturity?

• A)125%
• B)200%
• C)275%
• D)300%
• E)-100%

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Definitions:

Demand

The measure of goods or services that consumers are inclined and able to procure at assorted prices during an established period.

Income

The financial earnings of an individual or entity, typically acquired through employment, business ventures, or other investments.

Quantity Demanded

The aggregate sum of a product or service that buyers are ready and capable of buying at a specific price level.

Demand

The inclination to buy products and services supported by the capability and readiness to spend a specific amount of money.