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.

Understand the exemptions provided under the 1933 Act.

Grasp the concept of securities regulation's purpose in promoting transparency.

Recognize the importance of disclosure periods and their definitions under securities law.

Appreciate the role of state securities laws and their function.

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Definitions:

Scatterplot

A type of graph used in statistics to visually display and compare two variables for a set of data.

Yearly Production

The total quantity of goods or services produced by a company or sector within one calendar year.

Data Set

A collection of related sets of information that is composed of separate elements but can be manipulated as a unit by a computer.

Residuals

The differences between observed and predicted values in a statistical model, indicating the error in predictions.