The Premium on a Pound Put Option Is

question 31

Multiple Choice

The premium on a pound put option is $.04. The spot rate and the exercise price are $1.52. The spot rate at the time of this option expiration is expected to be $1.51. Speculators could profit by:

• A) writing a put option.
• B) buying a put option.
• C) buying a call option
• D) writing a call option AND buying a call option simultaneously.

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Definitions:

Right of Exoneration

A legal principle that allows a person who has discharged a debt or obligation, which was owed jointly with others, to obtain reimbursement from the other parties responsible for the debt.

Surety

A financial agreement where a third party (surety) guarantees the obligations of a debtor to the creditor, providing assurance that the debtor's obligations will be fulfilled.

Artisan's Service

The work or craft of skilled manual workers who make items largely by hand, often with traditional methods.

Lien

A legal right or interest that a creditor has in the debtor's property, typically lasting until the debt that it secures is paid.