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Suppose an Individual Investor Purchases a Financial Call and Pays

Question 3

True/False

Suppose an individual investor purchases a financial call and pays $10 per share to obtain the right,but not the obligation,to purchase 25 shares of a company's stock for $100 in the future.If the firm's share price collapses and the individual investor does nothing,he/she has only lost the original option purchase price of $250 ($10 x 25 shares).

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