At What Point on the Graph of Possible Values for a Call

question 32

Multiple Choice

At what point on the graph of possible values for a call option does the buyer break even financially?

• A) When stock price equals strike price
• B) At any point on the upward-sloping segment of the graph
• C) When stock price equals cost of the option plus strike price
• D) At the point where the graph intercepts the y-axis

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Definitions:

Enforce Promises

The legal ability to ensure that agreements or commitments are carried out, often through contract law.

Adequacy Of Consideration

Evaluation of whether the value exchanged in a contract is fair and sufficient, although the law often requires only some value to be exchanged.

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