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:

Structural Inequality

Systemic disparities in access to resources, opportunities, and rights, often based on social categorizations such as race, gender, or class.

Fully Functional

Describes a system, machine, or organism operating at maximum capacity with all parts in working order.

Chicago School

Refers to a sociological approach that emphasizes the influence of the social and physical environment on behavior, originating from the University of Chicago in the early 20th century.

Race Relations

The interactions and relationships between racial groups within a society, including the dynamics of racial discrimination, segregation, and the efforts toward racial equity and integration.