Carl Is an Option Writer

question 56

Multiple Choice

Carl is an option writer. In anticipation of a depreciation of the British pound from its current level of $1.50 to $1.45, he has written a call option with an exercise price of $1.51 and a premium of $.02. If the spot rate at the option's maturity turns out to be $1.54, what is Carl's profit or loss per unit (assuming the buyer of the option acts rationally) ?

• A) -$0.01.
• B) $0.01.
• C) -$0.04.
• D) $0.04.
• E) -$0.03.

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Definitions:

Central Nervous System

The part of the nervous system consisting of the brain and spinal cord, responsible for processing and sending out neural signals.

Nerve

A bundle of fibers that transmits electrical impulses toward and away from the brain and spinal cord, facilitating communication between the body and nervous system.

Electrical Messages

Signals transmitted along neurons through changes in electrical potential, facilitating communication within the nervous system.

Nervous Tissue

A type of tissue composed of neurons and glial cells, specializing in the transmission of electrical nerve impulses throughout the body.