What Is the Worst-Case Profitability Scenario for an Investor Who

question 52

Multiple Choice

What is the worst-case profitability scenario for an investor who sold a call on the firm's stock for a premium of $10 and a strike price of $100?

• A) $90 per share profit
• B) $10 per share profit
• C) $0 per share profit
• D)Unlimited losses

---

Definitions:

Net Income

The total profit or loss of a company after all revenues, expenses, taxes, and costs have been subtracted.

Financial Statements

Reports that summarize the financial performance and position of a business, including the balance sheet, income statement, and cash flow statement.

Accrued Revenues

Revenues earned but not yet received in cash or recorded at the statement date, often recognizing revenue before the payment is received.

Financial Statements

Financial Statements are formal records of the financial activities and position of a business, person, or other entity, presented in a structured manner.