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If a stock option is never exercised, the return on investment generated is

A) 100%.
B) 0%.
C)-100%.
D) Not enough information given to determine

1 Answer

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Final answer:

The return on investment for an unexercised stock option is -100%, which reflects the total loss of the premium paid for the option by the investor.

Step-by-step explanation:

If a stock option is never exercised, the return on investment generated is -100%. This is based on the idea that an option gives the holder the right, but not the obligation, to buy or sell a certain amount of stock at a predetermined price within a certain timeframe. If the option is not exercised, the investor will lose the entire premium paid for the option. Therefore, the investment is completely lost, resulting in a return of -100%.

User John Driscoll
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