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:

Marginal Benefit (MB)

The augmented satisfaction or usefulness obtained by consuming or producing one extra unit of a good or service.

Marginal Cost (MC)

An upsurge in the cumulative cost incurred from the production of one more unit of a product or service.

Marginal Benefit

The boost in satisfaction or utility experienced by a consumer when they consume an additional unit of a specific good or service.

Total Benefit

The complete gain or advantage that an individual, entity, or society receives from consuming a good or service.