a. Which one of the following comparative statements about common stock call options and warrants is correct?

b. Consider a bullish spread option strategy using a call option with a $ 25 exercise price priced at $ 4 and a call option with a $ 40 exercise price priced at $ 2.50. If the price of the stock increases to $ 50 at expiration and the option is exercised on the expiration date, the net profit per share at expiration (ignoring transaction costs) is
i. $ 8.50
ii. $ 13.50
iii. $ 16.50
iv. $ 23.50
c. A convertible bond sells at $ 1,000 par with a conversion ratio of 40 and an accompanying stock price of $ 20 per share. The conversion premium and (percentage) conversion premium, respectively, are
i. $ 200 and 20%
ii. $ 200 and 25%
iii. $ 250 and 20%
iv. $ 250 and 25%
d. A put on XYZ stock with a strike price of $ 40 is priced at $ 2 per share, while a call with a strike price of $ 40 is priced at $ 3.50. What is the maximum per- share loss to the writer of the uncovered put and the maximum per- share gain to the writer of the uncovered call?

e. You create a strap by buying two calls and one put on ABC stock, all with a strike price of $ 45. The calls cost $ 5 each, and the put costs $ 4. If you close your position when ABC is priced at $ 55, your pershare gain or loss is
i. $ 4 loss
ii. $ 6 gain
iii. $ 10 gain
iv. $ 20 gain

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Call Option Warrant i Issued by the company ii. Sometimes attached to bonds ii. Maturity greater than one year iv. Convertible into the stock No Yes Yes Yes Yes Yes No No Maximum Loss to Put Writer i $38 i. $38 ii $40 iv. $40 Maximum Gain to Call Writer $3.50 $36.50 $ 3.50 $40.00