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:

Flotation Cost

The total costs incurred by a company in issuing new securities, including underwriting, legal, registration, and other expenses.

Cost of Capital

The rate of return a company must pay to its shareholders and debt holders, representing the cost of obtaining funds to finance its operations.

Long-Term Funds

Investments or sources of financing that are provided or required for a duration exceeding one year.

Acquisition of Assets

The process by which a company purchases or obtains assets, such as property, equipment, or other resources, to enhance its business operations.