could you please help me resolve this one? i was confuse how to calculate this one.how do we know the first one is 5700 rather than is 6800?the second one is 800 rather is 700? 19.If the call is exercised when the market price of XYZ is 70, what is theinvestor's profit?A. $700B. $800C. $1,000D. $1,200 Use the following to answer questions 18-19.An investor purchases 100 shares of XYZ at 60 and also writes an XYZ 65call @3.18. What is the investor's maximum potential loss?A. $5,700B. $6,300C. $6,500D. $6,800

Here, Details of Ques-18: Purchase Price of Share is $60 Number of Shares purchased is 100 Exercise…

Answered: An investor purchases 100 shares of XYZ…

An investor purchases 100 shares of XYZ at 60 and also writes an XYZ 65 call @3. 18. What is the investor's maximum potential loss? A. $5,700 B. $6,300 C. $6,500 D. $6,800

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter7: Stocks (equity) - Characterstics And Valuation

Section: Chapter Questions

Problem 2PROB

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Question

could you please help me resolve this one? i was confuse how to calculate this one.

how do we know the first one is 5700 rather than is 6800?

the second one is 800 rather is 700?

19.If the call is exercised when the market price of XYZ is 70, what is the
investor's profit?
A. $700
B. $800
C. $1,000
D. $1,200

Use the following to answer questions 18-19.
An investor purchases 100 shares of XYZ at 60 and also writes an XYZ 65
call @3.
18. What is the investor's maximum potential loss?
A. $5,700
B. $6,300
C. $6,500
D. $6,800

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