USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 59

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

-Refer to Exhibit 16.8. If you establish a long strip using the options with a 95 exercise price, what is your dollar gain or loss if at expiration XYZ is still trading at 101 11/16?

• A) $256.25 loss
• B) $256.25 gain
• C) $925.00 loss
• D) $668.75 gain
• E) $668.75 loss

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Definitions:

Market Cap

The total market value of a company's outstanding shares of stock, calculated by multiplying the stock's current market price by the total number of shares.

EV/EBITDA Ratio

A valuation metric comparing a company's enterprise value to its earnings before interest, taxes, depreciation, and amortization, highlighting company profitability.

Geographically

Pertaining to or based upon the natural features, population, industries, etc., of regions or places.

Quick Ratio

A liquidity metric indicating a company’s capacity to meet short-term obligations with its most liquid assets without selling inventory.