At Expiry, a Holder of a Call Option with an Exercise

question 61

Multiple Choice

At expiry, a holder of a call option with an exercise price of $32 (purchased for a premium of $0.85) over Wesfarmers shares (now trading at $33.65) will:

• A)exercise with a profit of $1.65 per share
• B)exercise with a profit of $0.80 per share
• C)exercise with a profit of $0.85 per share
• D)not exercise with a loss of $0.85 per share.
• E)None of these.

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Definitions:

Acquisition

The process of one company purchasing most or all of another company's shares to gain control of that company.

Assumes Obligations

The act of taking on responsibilities, duties, or commitments, often legally or contractually.

Employee-Owned Corporation

A business structure where employees hold a significant portion of the company's shares, contributing to decision-making processes.

Multi-National

Corporations or companies that operate in multiple countries outside of their headquarters or origin country.