At What Point Is the Payoff from Owning a Call

question 61

Multiple Choice

At what point is the payoff from owning a call option on a stock greater than the payoff from owning the stock itself?

• A) When stock price exceeds strike price at expiration
• B) When strike price exceeds stock price at expiration
• C) When stock price equals strike price at expiration
• D)Call payoff never exceeds stock payoff.

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Definitions:

Accounts Receivable

Accounts Receivable is an asset account on the balance sheet representing money owed to a business by customers for goods or services delivered on credit.

Inventory Turnover Ratio

A measure of how quickly a company sells its inventory in a given period, calculated by dividing the cost of goods sold by the average inventory.

Liquidity Ratio

A financial metric indicating how quickly a company can convert assets into cash to meet short-term obligations.