A Put Option on Yen Is Written with a Strike

question 35

Multiple Choice

A put option on yen is written with a strike price of ¥105.00/$. Which spot price maximizes your profit if you choose to exercise the option before maturity?

• A) ¥100/$
• B) ¥105/$
• C) ¥110/$
• D) ¥115/$

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Definitions:

Rising Prices

A situation where the general level of prices for goods and services in an economy increases over a period of time.

Average Total Cost

The total cost of production divided by the quantity of output, encompassing both fixed and variable costs.

Average Variable Cost

The cost per unit of production that varies with the level of output, calculated by dividing the total variable costs by the number of units produced.

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production inputs.