Exhibit 22.3 Use the Information Below for the Following Problem(S)

question 76

Multiple Choice

Exhibit 22.3
Use the Information Below for the Following Problem(S)
A stock currently trades for $130 per share. Options on the stock are available with a strike price of $125. The options expire in 10 days. The risk free rate is 3% over this time period, and the expected volatility is 0.35.
-Assume that you have just sold a stock for a loss at a price of $75,for tax purposes.You still wish to maintain exposure to the sold stock.Suppose that you sell a put with a strike price of $80 and a price of $7.25.Calculate the effective price paid to repurchase the stock if the price after 35 days is $70.

• A) $77.75
• B) $87.25
• C) $82.25
• D) $72.75
• E) None of the above

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Definitions:

Epidermis

The outermost layer of skin in vertebrates; it serves as a protective barrier against environmental factors.

Bacterial Infection

A pathological condition resulting from the presence of microorganisms such as bacteria in the body.

Water Loss

The process through which water is eliminated from an organism or an environment, which can occur through means such as evaporation, respiration, or excretion.

Blood Vessels

Tubes in the body through which blood circulates, including arteries, veins, and capillaries.