You Have $100 to Invest in a Stock (Or Options

question 23

Multiple Choice

You have $100 to invest in a stock (or options on the stock) .The stock is trading for $100.The three-month 100-strike calls on the stock are trading at $4 each.The minimum stock price you expect to see after three months is $60.What is the worst case return on investment you can possibly end up with using stock and/or options?

• A)-100%
• B)-40%
• C)0%
• D)+6%

---

Definitions:

Dock Warrants

Documents that certify the ownership of goods stored in a warehouse or dock, enabling the holder to take possession or control of the goods.

Dock Receipts

Documents used in the transportation industry that acknowledge receipt of goods by a carrier for shipment.

Security Interest

A legal claim or lien on collateral that has been pledged, usually to secure repayment of a loan.

Debtor

A Debtor is an individual or entity that owes money or has financial obligations to another party, known as the creditor.