You Are Currently Holding a Call Option on a Stock

question 22

Multiple Choice

You are currently holding a call option on a stock with an exercise price of $80.If the current stock price is $60,your net proceeds by exercising this option will be:

• A) -$20.
• B) $0.
• C) $20.
• D) $60.

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Definitions:

Above Equilibrium

Above Equilibrium describes a condition where the price of a good or service is higher than the equilibrium price, leading to a surplus of supply over demand.

Quantity Demanded

It is the specific amount of goods or services that consumers are willing and able to purchase at a given price point, at a specific time.

Quantity Supplied

The total quantity of goods or services that businesses are ready and willing to sell at a designated price for a fixed period.

Productive Efficiency

A situation where a firm or economy cannot produce more of one good without reducing the output of another good, indicating optimal production levels.