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Author Question: Amy owns 100 shares of ABC stock with a cost basis of $35 a share. The stock is currently trading at ... (Read 56 times)

heatherbabydoll1

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on: Mar 29, 2022

Question 1

The writer of a call option is theoretically exposed to an unlimited loss.
◦ true
◦ false

Question 2

Amy owns 100 shares of ABC stock with a cost basis of $35 a share. The stock is currently trading at $54 a share. Amy believes the price of ABC stock will fall to $45 a share in the near future but over the longer term of 3 to 5 years, increase in value to $75 a share. Amy would like to benefit from the expected near-term decline if it occurs. Therefore, Amy writes a covered call at a strike price of $55 and a premium of $2. 
(a)How will the covered call help Amy profit if the expected price decline occurs?
(b)What is the maximum loss Amy can incur from the call?
(c)What is the maximum profit Amy can incur from the call?
Fundamentals of Investing ¦ Zutter, Smart ¦ 14th Edition
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Marked as best answer by heatherbabydoll1 on Mar 29, 2022

senorfranco

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Reply #1 on: Mar 29, 2022
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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heatherbabydoll1

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Reply 2 on: Mar 29, 2022
YES! Correct, THANKS for helping me on my review

atrochim

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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