At What Point Is the Payoff from Owning a Call

question 61

Multiple Choice

At what point is the payoff from owning a call option on a stock greater than the payoff from owning the stock itself?

• A) When stock price exceeds strike price at expiration
• B) When strike price exceeds stock price at expiration
• C) When stock price equals strike price at expiration
• D)Call payoff never exceeds stock payoff.

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Definitions:

Uncertainty Avoidance

A cultural dimension that describes the extent to which people in a society are uncomfortable with ambiguity, risk, and uncertainty in their daily lives.

Hofstede's Dimensions

A framework for cross-cultural communication, which describes the effects of a society's culture on the values of its members, and how these values relate to behavior.

United States

A country in North America, consisting of 50 states, a federal district, five major self-governing territories, and various possessions.

Socialization

The process through which an organization communicates its values to new employees.