The price of a stock is $$10\mathrm{.}9.$ A call option on this stock has a strike price of $$7\mathrm{.}1$ and is quoted at

You enter a short position in this European call option. One option contracts covers $100$ underlying shares.

The call option is exercised when the stock price is $$22\mathrm{.}3.$ Calculate your total net loss:

Which of the following is NOT true about call and put options:

Select one:

Investors must pay an upfront price $($the option premium$)$ for an option contract.

A European option can only be exercised only on the maturity date.

For a given expiry date, the price of a call option increases as the strike price increases.

An American option can be exercised at any time during its life.

A trader who is "bearish" is someone who believes the price of the underlying asset will fall.

Which of the following option positions are suitable for bearish sentiment over the underlying asset?

Select one:

a$.$ Long call

b$.$ Short call

c$.$ Long put

d$.$ Short put

e$.$ Both $($a$)$ and $($b$)$ are bearish strategies

f$.$ Both $($c$)$ and $($d$)$ are bearish strategies

g$.$ Both $($a$)$ and $($d$)$ are bearish strategies

h$.$ Both $($b$)$ and $($c$)$ are bearish strategies

You are bullish on the prospects of ABC share price rising. There are two speculative strategies that you are considering.

Under the first strategy, you would purchase $100$ABC shares at the spot price of $$3.$

Under the second strategy, you would enter long European call options covering $1,000$ABC shares. The option has a strike price of $$11\mathrm{.}9$ and can be purchased for a premium of

$$0\mathrm{.}3$ per share.

How high must ABC share price rise for the second strategy to become at least as profitable as the first? That is$,$ at what share price do the two strategies provide the same profit?

Enter your answer to $2$ decimal places.

Answer: