The Maximum Gain for the Purchaser of a Call Option

question 18

Multiple Choice

The maximum gain for the purchaser of a call option contract is ________ while the maximum loss is ________.

• A) unlimited; the premium paid.
• B) the premium paid; unlimited.
• C) unlimited; unlimited.
• D) unlimited; the value of the underlying asset.

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Definitions:

Foreign Currency Transaction

A business deal or operation that involves the exchange of currencies from two different countries.

Australian Dollars

The official currency of Australia, symbolized as AUD.

Closing Rate

The exchange rate at the balance sheet date used to convert foreign currency denominated financial statements into the presentation currency.

Functional Currency

The currency of the primary economic environment in which an entity operates, typically used in its financial reporting.