Martin Owns 15,000 Shares of Stock That He Wants to Sell

question 3

Multiple Choice

Martin owns 15,000 shares of stock that he wants to sell sometime within the next three months. Shares of this stock are currently selling for $43.24. The stock has been increasing in price but Martin is concerned the price might start to fall. He is not yet willing to sell his shares just in case the price rises some more. To guarantee that he can receive at least $42.50 a share when he does sell, Martin could purchase _____ with a strike price of $42.50.

• A) 1,500 warrants
• B) 150 calls
• C) 15,000 puts
• D) 1,500 puts
• E) 150 puts

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Definitions:

Component Depreciation

A method of depreciation where different components of a fixed asset are depreciated separately over their respective useful lives.

Plant Assets

Long-lived tangible assets used in the production of goods and services, such as machinery, buildings, and equipment.

IFRS

The International Financial Reporting Standards are a set of accounting guidelines that govern how financial statements are prepared and reported globally, enhancing comparability and transparency.

Computer System

A set of integrated devices that interact to process, store, and output data according to programmed instructions.