You Sell a Call with a Strike Price of $90

question 9

Multiple Choice

You sell a call with a strike price of $90 and a premium of $3.84. You simultaneously purchase the stock at a $90 price. If the stock price at expiration is $84.17, what is your profit per share from this transaction?

• A) -$3.84
• B) -$1.99
• C) $1.62
• D) -$5.83
• E) $1.99

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Definitions:

Predictive Value

The ability of financial information to help users make accurate predictions about future outcomes.

Future Events

Incidents or occurrences that have not yet happened but are anticipated or expected to occur in the course of a business's operation.

Constraint In Accounting

In accounting, constraints involve the limitations or boundaries that must be considered when preparing financial statements, such as materiality, cost-benefit considerations, and timeliness.

Measurement Principle

A fundamental accounting principle that dictates how transactions should be recorded based on their actual cost in financial statements.