An Investor Purchases a Call Option and Its Underlying Stock

question 39

Multiple Choice

An investor purchases a call option and its underlying stock on the same day. If the stock appreciates by 25%, the call option will appreciate by ________.

• A) more than 25%
• B) less than 25%
• C) exactly 25%
• D) none of the above

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Definitions:

Income Connected

Relates to earnings or revenue that is directly related to a specific source or activity, often used in legal or tax contexts.

Standard Mileage Rate

A set rate per mile set by the IRS that taxpayers can use to calculate deductions for the business use of a vehicle.

Business Deduction

Expenses incurred in the operation of a business that can be subtracted from its income to reduce the taxable income.

Vehicle Expenses

Costs associated with the operation, maintenance, and use of a vehicle for business purposes, including fuel, repairs, and insurance.