The Owner of a Three Month Call Option Allows the Option

question 14

Multiple Choice

The owner of a three month call option allows the option to expire unexercised. The owner

• A) has a capital loss equal to the market price of the stock.
• B) has a capital loss equal to the strike price.
• C) has a capital loss equal to the premium.
• D) has a capital loss equal to the market value less the strike price.

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Definitions:

Domestic Producers

Refers to manufacturers and suppliers that create goods and services within a country's borders, contributing to its economy.

Domestic Consumers

Individuals or households within a country that purchase goods and services for personal use, as opposed to businesses or foreign buyers.

Tariff

A tax imposed by a government on imported goods or services to protect domestic industries or generate revenue.

Infant Industry

A new or emerging industry that may be protected by the government from international competition to allow it to grow.