Which alternative offers you the lowest effective rate of return?

John contracted to rent a condominium in the U.S. Virgin Islands for the month of September. In

early August, the condominium was destroyed by a hurricane. The contract contained a clause that the parties' obligations would be discharged in the event of a natural disaster. In this situation: A) This results in an accord and satisfaction under which alternate time in the condominium must be provided once is it reconstructed. B) The parties' obligations are not discharged because a hurricane is foreseeable in the Virgin Islands. C) This is an enforceable force majeure clause that would discharge the parties. D) The force majeure clause renders the contract void because it makes the promises illusory. E) This is an example of the doctrine of commercial impracticability discharging the parties.

You have shorted a call option on WSJ stock with a strike price of $50. The option will expire in exactly six months. If the stock is trading at $45 in three month, what will you owe for each share in the contract?

A) $0 B) $50 C) $60 D) $10