Suppose You Purchase a Call Option for $5 and a Strike

question 16

Multiple Choice

Suppose you purchase a call option for $5 and a strike price of $20.On the expiration day,the price of the stock is $30.What is the return on the call option if you hold your position until maturity?

• A)25%
• B)50%
• C)75%
• D)100%
• E)0%

---

Definitions:

Special Knowledge

Extraordinary or advanced understanding and information in a particular field or subject, beyond that of the average person.

Unconscionable Clause

A term in a contract deemed so unjust that it is unenforceable under the law.

Voidable Title

A legal concept indicating that a title or ownership can be rendered invalid by a court if certain conditions are met.

Good-faith Purchaser

An individual who buys property without knowledge of any existing claims or disputes over the property.