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

question 50

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%

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Definitions:

Contributed Shares

Shares issued to investors or others as part of the equity financing of a company, represents part of the capital contributed by the shareholders.

Authorized Shares

The maximum number of shares that a corporation is legally permitted to issue, as specified in its articles of incorporation.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and stockholders' equity at a specific point in time.