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:

Market Price

The prevailing rate at which a commodity or service is available for purchase or sale in a specific market.

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price over a specific time period.

Number of Sellers

Refers to the total quantity of providers or suppliers offering a particular good or service in a market.

Technological Innovations

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