You Purchase a Stock at $70 and Simultaneously Write a Call

question 18

Multiple Choice

You purchase a stock at $70 and simultaneously write a call with a $70 strike price. If the call premium is $4.32, what is your profit per share if the stock price at expiration is $73.64?

• A) $4.32
• B) $3.64
• C) $7.96
• D) $0.68
• E) -$3.64

Calculate and interpret net income.

Calculate and interpret return on assets.

Identify the basic financial statements and their exclusions.

Describe how equity changes over a period of time.

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Definitions:

Interest Expense

The financial charge for the use of borrowed capital, reflected in the income statement.

Insurance Expense

The cost associated with purchasing insurance policies to protect against risks, often reported as an operating expense.

Income Statement Accounts

Income statement accounts include all the revenue and expense accounts that determine a company's net income or net loss for a specific period.

Balance Sheet Accounts

Accounts that appear on the balance sheet, such as assets, liabilities, and shareholders' equity, reflecting the financial position at a specific point in time.