Ask Question
30 August, 12:43

A customer purchases 1 XYZ July 50 call @ 5. The customer will breakeven at which of the following market prices for the underlying security?[A] 5[B] 45[C] 50[D] 55

+4
Answers (1)
  1. 30 August, 14:01
    0
    (D) 55

    Explanation:

    For the purchase of 1 XYZ July 50 call @ 5, the customer has already paid a call premium of $5 (indicated by the @5).

    The exercise price of the call is $50, meaning the call option gives the customer the right to buy XYZ at $50.

    Thus, the customer will break even when the market price of XYZ = the exercise price + the premium

    = 50 + 5 = 55.

    At that market price ($55), the customer would pay a total of $5 premium, plus an exercise price of $50, which equals $55 (same as the market price.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “A customer purchases 1 XYZ July 50 call @ 5. The customer will breakeven at which of the following market prices for the underlying ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers