Suppose You Purchase a Call Option for $5 and a Strike

question 101

Multiple Choice

Suppose you purchase a call option for $5 and a strike price of $20. On the expiration day, the price of the stock is $30. What is the return on the call option if you hold your position until maturity?

• A) 25%
• B) 50%
• C) 75%
• D) 100%

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Definitions:

Voodoo

A religion originating in West Africa, which involves the worship of ancestors and spirits, and is characterized by rituals and ceremonies that can include drumming, singing, dancing, and spirit possession.

Religion

A set of beliefs concerning the cause, nature, and purpose of the universe, especially when considered as the creation of a superhuman agency or agencies, usually involving devotional and ritual observances.

Society

An organized group or groups of interdependent people who generally share a common territory, language, and culture and who act together for collective survival and well-being.

Goals

Objectives or targets that an individual, group, or organization strives to achieve through concerted efforts.