USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 48

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

-Refer to Exhibit 16.1. If the spot rate at expiration is $0.90 and the call option was purchased, what is the dollar gain or loss?

• A) $0
• B) $3750 gain
• C) $3660 gain
• D) $4650 loss
• E) $2680 loss

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Definitions:

Profit Comparisons

The process of analyzing changes in profit metrics over time or against industry benchmarks to gauge financial health or performance.

Economic Differences

The variations in economic conditions and outcomes among different regions, populations, or time periods, often studied to improve economic policies.

Salvage Value Proportions

Estimated residual value of an asset after its useful life, represented as a portion of its original cost.

Artificial Differences

Discrepancies or variations that result from inconsistent application of rules or criteria, not reflecting true differences.