A Speculator Buys a Call Option for $3, with an Exercise

question 2

Multiple Choice

A speculator buys a call option for $3, with an exercise price of $50. The stock is currently priced at $49, and rises to $55 on the expiration date. What is the stock price at which the speculator would break even? ​

• A)$50
• B)$58
• C)$52
• D)$53
• E)$49

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Definitions:

Line Extension

The introduction of additional items in a product line under the same brand name, often new flavors, forms, colors, added ingredients, or package sizes.

Brand Strategy

A plan developed by a business to create a particular image of itself and its products or services in the minds of consumers, distinguishing it from its competitors.

Brand Dilution

The weakening of a brand’s strength and value, often as a result of overextension, inconsistent marketing, or association with lower quality products.

Luxury Sports Cars

High-end vehicles that combine superior design, craftsmanship, performance capabilities, and often advanced technological features for an elevated driving experience.