USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 28

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
GE Corporation has a put option selling for $2.90 and a call option selling for $1.95, both with a strike price of $29.00.
-Refer to Exhibit 16.6. What would the net value of a covered call position be if the stock price at expiration is $35?

• A) $29.00
• B) $30.65
• C) $33.55
• D) $36.00
• E) $36.65

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Definitions:

Croissants

A flaky, buttery pastry of Austrian origin that is associated with French cuisine and often eaten for breakfast.

Producer Surplus

The difference between the amount producers are willing and able to sell a good for and the actual amount they do sell it for.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive in the market.

Producer Surplus

The gap between the price producers are ready to take for a good or service and the price they actually get.