You Paid $5 a Call Option on a Stock with an Exercise

question 87

Multiple Choice

You paid $5 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 and selling the stock will be:

• A)($25).
• B)$0.
• C)$20.
• D)$60.

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Definitions:

Common-sized Income Statement

An income statement in which each line item is expressed as a percentage of sales revenue, facilitating comparison across periods and companies.

Common-sized Balance Sheet

A financial statement in which each line item is expressed as a percentage of total assets, facilitating comparison across firms and time periods.

Percentage Analyses

A financial analysis technique that expresses components of financial statements as percentages of a base amount to compare financial data across periods or companies.

Ratios

Quantitative metrics calculated from financial statements to evaluate various aspects of a company's performance or financial health.