A Call Option with a Strike of K = 100

question 20

Multiple Choice

A call option with a strike of K = 100 is purchased at a premium of $4. The stock price at maturity is $105. The net payoff of the option is

• A) $1
• B) $5
• C) $96
• D) $101

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Definitions:

Auditory Perception

The process by which the brain interprets and makes sense of sound signals received from the ears.

Analyzed

The process of examining something methodically and in detail, typically for purposes of explanation and interpretation.

Complex Songs

Intricate and often long sequences of vocal sounds produced by certain animals, such as birds, to communicate with others, often used in mate attraction and territorial defense.