It Is May 19 and You Own a June European

question 87

Multiple Choice

It is May 19 and you own a June European call on ABC Corp. with an exercise price of $50. The option trades at $40 and ABC is trading at $86. What should you do?

• A) Exercise the option now and take the profits.
• B) Buy more options on ABC Corp.
• C) Sell your ABC stock before its price declines.
• D)Sit and wait until the June expiration.

Interpret the right to cancel a contract based on breach and the implications for both parties involved.

Grasp the terms around remedy modification or limitation, including conditions under which a court may refuse to uphold such agreements.

Evaluate the role of usage of trade in imposing remedies for breaches of contract under the UCC.

Understand the UCC's provisions on acceptance of nonconforming goods and seeking monetary damages.

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Definitions:

Irrigation

The artificial application of water to land to assist in the production of crops.

Porosity

The measure of void spaces in a material, indicating the volume percentage of pores or spaces between particles.

Unfractured Granite

A type of igneous rock, characterized by its large crystals and lack of cracks or fractures, often used in construction due to its strength.

Fine-Grained Sediment

Sediment that consists of tiny particles and fragments, such as clay or silt, which are often transported by water or wind and deposited in calm environments.