Use the Figure for the Question Below

question 87

Multiple Choice

Use the figure for the question below.
-You have shorted a call option on WSJ stock with a strike price of $50. The option will expire in exactly six months. If the stock is trading at $60 in three months, what will you owe for each share in the contract?

• A) $0
• B) $60
• C) $50
• D) $10

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Definitions:

Withholding Amount

The portion of an employee's wages deducted by the employer and paid directly to the government as partial payment of income tax.

Taxable Payment

Any payment subject to tax by the relevant authorities, including wages, salaries, bonuses, and other income streams.

Taxpayer

A person or organization required to make tax payments to governmental authorities at the federal, state, or local level.

Standard Deduction

A fixed amount that taxpayers can subtract from their income before income tax is applied, reducing their taxable income.