You Are Currently Holding a Call Option on a Stock

question 22

Multiple Choice

You are currently holding a call option on a stock with an exercise price of $80.If the current stock price is $60,your net proceeds by exercising this option will be:

• A) -$20.
• B) $0.
• C) $20.
• D) $60.

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Definitions:

Z-statistic

A statistical measure that represents the number of standard deviations a data point is from the mean of a data set.

Probabilities

Measuring how likely it is for an event to occur, using a numeric scale that falls between 0 and 1.

Normal Probability Distribution

A bell-shaped probability distribution characterized by its mean and standard deviation, describing how random values are spread or dispersed.

Parameters

Quantitative values that define the behavior and characteristics of a model or function.