Finra Exam Series-7 Topic 4 Question 99 Discussion

Actual exam question for Finra's Series-7 exam

Question #: 99
Topic #: 4

In early September, Bubba buys 100 shares of XYZ for $83 per share and simultaneously writes one XYZ March 90 call for $4.

What is the price for XYZ stock at which Bubba will breakeven?

A$94

B$87

C$86

D$79

Show Suggested Answer

Suggested Answer: D

$79. Bubba's breakeven is his cost of the stock less the premium he received ($83 - $4).

by Henriette at Sep 17, 2024, 08:30 PM

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Vashti

3 months ago

Hey, at least Bubba's not named Floppy Mcdoodle, am I right? But seriously, I think B) $87 is the answer.

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Elinore

2 months ago

C) $86

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Regenia

2 months ago

B) $87

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Aron

2 months ago

A) $94

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Norah

3 months ago

I'm not sure, but I think it's $94. Can someone explain their reasoning?

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Rima

3 months ago

D) $79, all the way baby! Bubba's gonna make a killing on this one, or my name ain't Rima!

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Lilli

1 months ago

D) $79, yeah, Bubba's gonna make a killing with that price!

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Noemi

2 months ago

C) $86, are you sure about that?

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Corrinne

2 months ago

B) $87, I think that's the right answer.

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Lonny

2 months ago

A) $94, that's the breakeven price for Bubba's stock.

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Christiane

3 months ago

I believe it's $86 because Bubba bought the stock for $83 and received $4 for writing the call option.

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Margarett

3 months ago

I think the breakeven price is $87.

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Onita

3 months ago

I'm going with C) $86. Gotta love a good options trade, even if Bubba's got a funny name.

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Samira

2 months ago

I believe it's D) $79.

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Luke

2 months ago

I agree with C) $86.

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Rosalind

3 months ago

I'm going with B) $87.

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Zona

3 months ago

I think it's A) $94.

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Margurite

3 months ago

Hmm, I'd say the answer is B) $87. That's the price where Bubba's initial investment plus the call premium equals the breakeven point.

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Jamal

3 months ago

Yes, you're right. B) $87 is the correct answer for the breakeven price of XYZ stock in this scenario.

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Rueben

3 months ago

I think it's B) $87 because that's where Bubba's initial investment plus the call premium equals the breakeven point.

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