Suppose You Own a Call Option on a Share with a Strike

question 65

Multiple Choice

Suppose you own a call option on a share with a strike price of $20 that expires today. The price of the underlying share is $15. If you exercise the option and immediately sell the share:

• A) you will earn $5.
• B) you will lose $5.
• C) you will lose $15.
• D) you will earn $15.

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Definitions:

Time Horizon

The fixed point in the future at which certain outcomes will be evaluated or a plan is expected to come to fruition.

Select Forecasting Model

Determining the most appropriate statistical or analytical model to predict future trends based on past and present data.

Delphi Method

A forecasting technique using a group process that allows experts to make forecasts.

Decision Makers

Individuals or groups responsible for making choices that determine an organization's or individual's course of action.