If the Owner of a Call Option with a Strike

question 105

Multiple Choice

If the owner of a call option with a strike price of $35 finds the stock to be trading for $42 at expiration, then the option:

• A)expires worthless.
• B)will not be exercised.
• C)is worth at least $7 per share.
• D)cost too much initially.

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Definitions:

Industry Average

A benchmark measure of the average performance or characteristic of companies within the same industry sector.

Dividend Per Share

The amount of dividend a company pays out for each share of its stock.

Net Income

The profit of a company after all expenses and taxes have been deducted from revenue, indicating its financial performance.

Shares Outstanding

The total number of a company's shares that are currently owned by shareholders, including those held by institutional investors and restricted shares owned by the company’s officers and insiders.