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1. You wrote six call option contracts on MNO stock with a strike price of $75 and an option price of $4.15. What is your total net profit or loss on all transactions related to this investment if the price of MNO is $78.20 on the option expiration date? Ignore taxes and transaction costs.
A. Net profit of $4,410
B. Net loss of $570
C. Net profit of $570
D. Net loss of $4,410
2. You buy one put option contract on a stock with exercise price of $55 at a put premium of $2.35. You also buy two call option contracts on the same stock with exercise price of $55 and a call premium of $3.18. Calculate the profit you make on your strategy if the stock price at the expiration of the contracts is $66 per share.
A. $811
B. $1,329
C. $1,166
D. $547
3. Which one of the following will cause the value of a call to decrease?
A. Lowering the exercise price
B. Lowering the risk level of the underlying security.
C. Increasing the risk free rate
D. Increasing the stock price
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