Today,you Are Buying a One-Year Call on One Share of Webster

question 2

Multiple Choice

Today,you are buying a one-year call on one share of Webster United stock with a strike price of $40 per share and a one-year risk-free asset that pays 4 percent interest.The cost of the call is $1.85 per share and the amount invested in the risk-free asset is $38.46.What is the most you can lose on these purchases over the next year?

• A)-$1.85
• B)-$0.31
• C)$0
• D)$0.42
• E)$1.54

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Definitions:

German Culture

Refers to the customs, traditions, arts, history, and social norms of the German people, influenced by centuries of historical and cultural development.

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A civilian organization created during the world wars to work in agriculture replacing men who had gone to fight in the war.

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An American women's rights organization founded in 1916 that played a significant role in the women's suffrage movement, advocating for the Equal Rights Amendment.