You Purchased a Call Option for $3

question 12

Multiple Choice

You purchased a call option for $3.45 17 days ago. The call has a strike price of $45, and the stock is now trading for $51. If you exercise the call today, what will be your holding-period return? If you do not exercise the call today and it expires, what will be your holding-period return?

• A) 173.9%, −100%
• B) 73.9%, −100%
• C) 57.5%, −173.9%
• D) 73.9%, −57.5%
• E) 100%, −100%

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Definitions:

Condenser

A device used to condense a gas or vapor into a liquid.

Ocular Lens

The lens closest to the eye in a microscope or telescope, through which the viewer looks to magnify the image formed by the objective lens.

Objective Lens

The part of a microscope or telescope that is closest to the object being observed, focusing light and creating an initial image.

Oil-Immersion Lens

A microscope lens designed to be used with a drop of oil between the lens and the slide, improving resolution by reducing light refraction.