Shares in Bonanza Inc. are trading at $100 per share on January 20. Gordon Gecko purchases a 10 day option for $1,000, to buy 50 shares of Bonanza at $100. Which of the following statements is FALSE?
A) On January 30, shares in Bonanza are $120. If Gecko exercises his option, he will have broken even.
B) On January 30, Bonanza has gone down to $80. Gecko does not exercise his option. He has lost $1,000.
C) There is no change in the price of the shares between January 20 and 30. If Gecko exercises his option, he will have broken even.
D) There is no change in the price of the shares between January 20 and 30. Gecko declines to exercise his option. He has lost $1,000.
E) Both C and D
Correct Answer:
Verified
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