Allman,Inc

question 6

Multiple Choice

Allman,Inc. ,enters into a call option contract with Betts Investment Co.on January 2,2014.This contract gives Allman the option to purchase 1,000 shares of Upmann stock at $100 per share.The option expires on April 30,2014.Upmann shares are trading at $100 per share on January 2,2014,at which time Allman pays $200 for the call option.
-Using the information above,the 1,000 shares of Upmann stock in this contract is referred to as the

• A) collateral.
• B) notional amount.
• C) option premium.
• D) derivative.

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Definitions:

Anaphylactic Reaction

A severe, potentially life-threatening allergic reaction that can occur rapidly and affect numerous body systems.

Epithelial Tissue

The type of animal tissue that covers body surfaces, lines body cavities, and forms glands; also called epithelium.