Suppose You Purchase a Call Option for $4 and a Strike

question 30

Multiple Choice

Suppose you purchase a call option for $4 and a strike price of $30.On the expiration day,the price of the stock is $40.What is the return on the call option if you hold your position until maturity?

• A)125%
• B)130%
• C)150%
• D)170%
• E)250%

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Definitions:

Proportion

A part, share, or number considered in comparative relation to a whole, often expressed as a fraction or percentage.

Confidence Interval

A series of values, taken from sampled data, believed to cover the value of a hidden population parameter.

Defective Fuses

Products in a batch of fuses that do not meet the required quality or performance standards.

Normal Distribution

A continuous probability distribution characterized by a symmetric bell-shaped curve, representing random variables with mean and variance.