Lauri Mazurek Buys a Call Option on Piede Inc

question 64

Multiple Choice

Lauri Mazurek buys a call option on Piede Inc.Currently Piede Inc.trades at $65 per share.The call option she buys has a strike price of $70 and has a premium of $4.What is Mazurek's breakeven price?

• A) $66
• B) $70
• C) $69
• D) $74

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Definitions:

Confidence Interval

A band of numerical estimates, from sample data, seen as likely to include the value of an invisible population characteristic.

Sampling Distribution

The probability distribution of a given statistic based on many random samples from a specific population.

Normal Distribution

A bell-shaped curve that describes the spread of a characteristic throughout a population; it is symmetric and depicts that data near the mean are more frequent in occurrence.

Null Hypothesis

The hypothesis that there is no significant difference or effect, often denoted H0, in statistical hypothesis testing.