Suppose You Purchase One WFM May 100 Call Contract at $5

question 82

Multiple Choice

Suppose you purchase one WFM May 100 call contract at $5 and write one WFM May 105 call contract at $2. What is the lowest stock price at which you can break even

• A)$101
• B)$102
• C)$103
• D)$104
• E)None of the options

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Definitions:

Discount Period

The timeframe during which a discount is available or the period between the receipt of a bill and its payment due date when a discount may be taken.

Full Settlement

A financial arrangement where a debtor pays a lump sum that is less than the total amount owed to fully settle the outstanding debt.

Perpetual Inventory System

An inventory accounting system that records purchases and sales of merchandise immediately through the use of computerized point-of-sale systems and enterprise asset management software.

Periodic Inventory System

A periodic inventory system is an accounting method where inventory levels and cost of goods sold are determined at the end of an accounting period, not after each sale or purchase.