Suppose That You Purchased a Call Option on the S&P

question 27

Multiple Choice

Suppose that you purchased a call option on the S&P 100 index.The option has an exercise price of 680 and the index is now at 720.What will happen when you exercise the option?

• A)You will have to pay $680.
• B)You will receive $720.
• C)You will receive $680.
• D)You will receive $4,000.
• E)You will have to pay $4,000.

Comprehend the persuasive argument theory and its significance in communication.

Understand the actor-observer difference and its impact on perception.

Describe the halo effect and its influence on perception, including its relationship with the similar-to-me effect.

Understand the principles of Kelley's attribution/covariation model and its application in interpreting others' behaviors.

---

Definitions:

Depreciation

The reduction in value of an asset over time, particularly in respect of wear and tear.

Expected Return

Expected return is the anticipated value or profit generated by an investment in the future, considering the potential risks and rewards.

Market Portfolio

A theoretical portfolio comprising all assets in the market, with each asset weighted by its market capitalization, representing the entire stock market's performance.

Risk-free Rate

The rate of return on an investment with zero risk, typically based on government bonds.