Suppose an Investor Buys One Share of Stock and a Put

question 48

Multiple Choice

Suppose an investor buys one share of stock and a put option on the stock. What will be the value of her investment on the final exercise date if the stock price is below the exercise price? (Ignore transaction costs.)

• A)The value of two shares of stock.
• B)The value of one share of stock plus the exercise price.
• C)The exercise price.
• D)The value of one share of stock minus the exercise price.

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Definitions:

Afterpotential

The electrical changes that occur in a neuron immediately following an action potential, which can affect the neuron's ability to fire again.

Permeability

Permeability refers to the ability of a material or membrane to allow liquids or gases to pass through it.

Sodium-Potassium Pump

The sodium-potassium pump is a membrane-bound enzyme critical for cellular function, actively transporting sodium out of and potassium into cells, helping maintain cellular electrochemical gradients.

Action Potential

An action potential is a rapid electrical impulse that travels along the membrane of a neuron or muscle cell, facilitating communication and response.