You Purchase One IBM July 120 Call Contract for a Premium

question 18

Multiple Choice

You purchase one IBM July 120 call contract for a premium of $5.You hold the option until the expiration date when IBM stock sells for $123 per share.You will realize a ______ on the investment.

• A) $200 profit
• B) $200 loss
• C) $300 profit
• D) $300 loss

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Definitions:

Assets

Economic resources owned by a business or individual that are expected to provide future benefits.

Par Value

The face value of a bond or stock as stated by the issuer, which bears importance in the legal capital of a company.

Land

A physical, immovable property asset, representing the earth's surface not including bodies of water or resources below the surface.

Cash Dividend

A distribution of profits by a corporation to its shareholders in the form of cash.