If an Investor Buys a 100-Share Call Option for $250

question 56

Multiple Choice

If an investor buys a 100-share call option for $250 with an exercise price of $60 and the underlying price per share of the stock at expiration is $66, what is the amount of profit or loss, ignoring brokerage fees?

• A) There would be a profit of $350.
• B) There would be a profit of $600.
• C) There would be a loss of $350.
• D) There would be a loss of $250.

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Definitions:

Evaluation Apprehension Model

A theory suggesting that anxiety about being evaluated by others can lead to increased or decreased performance depending on the individual and the context.

Social Facilitation

The tendency for individuals to perform better on simple or well-learned tasks in the presence of others than when alone.

Discretionary Task

refers to a job or an assignment that requires personal judgment or choice in its execution, often without strict guidelines or procedures.

Process Loss

Reduction in group performance compared to individual performance, often due to coordination and motivation problems.