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NEW QUESTION: 1
A. VM-K1 and VM-K2 only
B. VM-M1 only
C. VM-K1 only
D. VM-K1, VM-K2, and VM-M1
Answer: D
NEW QUESTION: 2
Projects can be authorized for all the following reasons except:
A. Business Need
B. Market Demand
C. Legal Requirement
D. Keeping the Project Manager busy
Answer: D
NEW QUESTION: 3
A stock is selling at $90. An investor writes a covered call on the stock with an exercise price of $100 in return for a premium of $3 per share. What would be the maximum gain or loss per share that the investor could make on this position?
A. Maximum gain of $13; maximum loss of $87
B. Maximum gain of $3, and no losses are possible as this is a covered call
C. Maximum gain of $10; maximum loss of $87
D. Maximum gain of $10; maximum loss of $90
Answer: A
Explanation:
Explanation
Once the price of the stock exceeds $100, the investor would forego any additional gains as the call would be exercised. Therefore the maximum gain to the investor is $10, plus the premium earned, which is $3, making for a maximum gain of $13.
In the event the stock price declines, the investor would lose on his long stock position an amount equal to the decline, less any premium earned. The worst case price for a stock is 0, and in this case the investor would lose his $90 in the stock, offset by $3 in premiums earned (the written call would expire worthless), thereby limiting his total loss to $87.
Choice 'c' is therefore the correct answer.