If an Investor Buys a 100-Share Call Option for $325

question 101

Multiple Choice

If an investor buys a 100-share call option for $325 with an exercise price of $15 and the underlying price per share of the stock at expiration is $13, what is the amount of profit or loss, ignoring brokerage fees?

• A) There would be a profit of $525.
• B) There would be a loss of $125.
• C) There would be a loss of $325.
• D) There would be a loss of $525.

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Definitions:

Hereditarianism

The theory that genetic inheritance is a primary determinant of human traits including intelligence, personality, and behavior.

Free Will

Free will refers to the belief that humans have the power to make choices that aren't predicated solely by biology or external forces.

Heredity

The genetic transmission of traits from parents to offspring.

Predict

To declare or indicate in advance; especially, to foretell based on observation, experience, or scientific reasoning.