An Investor Purchases a Long Call at a Price of $2.50

question 81

Multiple Choice

An investor purchases a long call at a price of $2.50. The strike price at expiration is $35. If the current stock price is $35.10, what is the break-even point for the investor?

• A) $32.50
• B) $35
• C) $37.50
• D) $37.60

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Definitions:

Double-Entry Accounting

An accounting method that involves making two entries for every transaction, to maintain the balance of the accounting equation.

Debits and Credits

Fundamental elements of double-entry bookkeeping, where debits represent increases in assets or expenses and credits signify increases in liabilities, equity, or income.

Transaction

An agreement or exchange between two or more parties that is recorded and has a financial impact on the business.

T-Account

A graphical representation of a ledger account, showing two sides for debits and credits, used in accounting.