You Own a Call Option on ABC Stock

question 113

Multiple Choice

You own a call option on ABC stock. The exercise price is $25 and the current stock price is $23. The option payoff will _________ if the stock price increases by $5 and the payoff will _________ if the stock price decreases by $5.

• A) Increase; decrease
• B) Increase; remain the same
• C) Remain the same; increase
• D) Remain the same; decrease
• E) Decrease; remain the same

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Definitions:

Eye Contact

The act of looking directly into another person's eyes, which can communicate various messages or emotions non-verbally.

Lying

The act of making a false statement with the intent to deceive others, concealing the truth to achieve a particular outcome.

Pitch

The perception of the frequency of sound, determining how high or low a tone sounds.

Intensity

The degree of strength, force, or energy with which an emotion, action, or quality is expressed or felt.