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

question 104

Multiple Choice

Suppose that you purchased a call option on the S&P 100 index.The option has an exercise price of 700 and the index is now at 760.What will happen when you exercise the option?

• A)You will have to pay $6,000.
• B)You will receive $6,000.
• C)You will receive $700.
• D)You will receive $760.
• E)You will have to pay $7,000.

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Definitions:

Operating Activities

Business actions directly related to the production and delivery of goods and services, generating revenue.

Comparative Balance Sheets

Side-by-side financial statements that compare a company's balance sheets at different points in time, typically to analyze trends or changes in financial position.

Net Income

The profit a company makes after subtracting all its costs and expenses from its total revenues.

Prepaid Insurance

An asset account that represents the amount of insurance premium payments made in advance and has not yet expired at the balance sheet date.