A Speculator Buys a Call Option for $3, with an Exercise

question 51

Multiple Choice

A speculator buys a call option for $3, with an exercise price of $50. The stock is currently priced at $49, and rises to $55 on the expiration date. The speculator will exercise the option on the expiration date (if it is feasible to do so) . What is the speculator's profit per unit?

• A)$1
• B)$5
• C)$2
• D)-$1
• E)-$2

---

Definitions:

Accountants

Professionals responsible for managing and reporting a company's financial information, ensuring accurate bookkeeping, tax compliance, and financial statement preparation.

Managerial Accountant

A professional who specializes in providing financial information and analyses to managers within organizations for decision-making.

Internal Reports

Financial or operational reports intended for use within an organization, not for external stakeholders.

Decision-Making Process

A series of steps followed by an individual or an organization to identify and evaluate options to make a choice.