What Is the Option Buyer's Total Profit or Loss Per

question 18

Multiple Choice

What is the option buyer's total profit or loss per share if a call option is purchased for a $5 premium, has a $50 exercise price, and the stock is valued at $53 at expiration?

• A)($5)
• B)($2)
• C)$3
• D)$8 Value of call option = stock price - exercise price
• Total profit of call = value of call option - premium paid
• Then:
• Value of call option = $53 - 50 = $3

Calculate and interpret portfolio standard deviation and beta as measures of risk.

Understand the concept of correlation and its impact on portfolio risk.

Interpret regression outputs related to stock and market returns.

Understand and apply the concept of the Sharpe ratio in evaluating investment performance.

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