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An Investor Purchases a Call Option and Its Underlying Stock

question 39

Multiple Choice

An investor purchases a call option and its underlying stock on the same day. If the stock appreciates by 25%, the call option will appreciate by ________.

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Definitions:

Bonds Outstanding

The total amount of bonds issued by a corporation or government that have not yet been repaid.

Fixed Assets

Long-term tangible property owned by a business that is used in its operations and is not expected to be consumed or converted into cash within a year.

Salaries Payable

The amount of salary expenses that have been incurred by a company but have not yet been paid to employees, classified as a liability.

Operating Activities

Day-to-day actions that relate to producing and delivering a company’s products and services, forming the primary source of revenue.

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