You Purchased 6 Call Options with a $40 Strike Price

question 91

Multiple Choice

You purchased 6 call options with a $40 strike price at a total cost of $150.On the expiration date,the underlying stock was priced at $39.20.What is the percentage return on your investment?

• A) -420 percent
• B) -100 percent
• C) 68.75 percent
• D) 2.02 percent
• E) 220 percent

Differentiate between mechanisms used for signaling versus screening.

Understand the economic implications of hiring practices and service contracts.

Understand the concept of moral hazard in the context of insurance and employment.

Distinguish between moral hazard and adverse selection.

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Definitions:

Contextual Aspect

The elements or conditions surrounding a situation or event that contribute to its meaning or consequences.

Situational Aspect

The context or circumstances that surround an event or behavior, influencing its outcome or nature.

Perseverance

Persistent effort and determination in pursuing goals despite obstacles, difficulties, or discouragement.

LPC Scale

A tool used in Fiedler's contingency theory to identify leadership style based on the least preferred coworker, distinguishing task-oriented from relationship-oriented leaders.