Lew Paid $300 to Purchase a Call on Delta Stock

question 90

Multiple Choice

Lew paid $300 to purchase a call on Delta stock with a strike price of $25.What does the market price of Delta have to be for Lew to break-even on his option investment? Ignore transaction costs and taxes.

• A) $22
• B) $25
• C) $28
• D) Cannot be determined from the information provided

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Definitions:

Budget Deficit

An economic situation where a government's expenditures exceed its revenue over a specified period of time, leading to borrowing or money printing.

Deficit Financing

The practice of funding government spending by borrowing rather than from taxation, leading to a budget deficit.

Tax Rates

The percentages at which income, property, and sales are taxed by governments, varying for different levels of income or value.

Market For Loanable Funds

The market in which those who want to save supply funds and those who want to borrow to invest demand funds.