A Call Option on a Stock Has an Exercise Price

question 59

Multiple Choice

A call option on a stock has an exercise price of $22.25.If the stock price at expiration is $25,what is the option payoff for a long call position?

• A)$2.75
• B)$0
• C)-$2.75
• D)$25
• E)$22.25

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Definitions:

Amortizes

The process of gradually paying off debt through a series of fixed payments over time, which covers both interest and principal.

Monthly Payments

Regular payments made over a period of time towards settling a debted amount, often associated with loans or lease agreements.

Fringe Benefit

Additional compensation provided to employees beyond their base salaries, such as health insurance, retirement plans, and paid time off.

Loan Payment Schedule

A detailed plan indicating the amounts due and payment dates over the life of a loan.