John plans to acquire shares of ABC Corp. by purchasing and exercising a call option. Which of the following statements regarding John's strategy is correct?
A) John will experience no gain or loss from implementing the strategy.
B) John faces no risk from the strategy.
C) If John implements the strategy, it will not impact ABC's shares outstanding.
D) John will pay no commission to implement the strategy.

Question

Quizplus · Accepted Answer

Exercising a call option allows John to buy shares from the option writer, not from the company, so it doesn't affect the number of shares outstanding.

John Plans to Acquire Shares of ABC Corp