Exhibit 20.5 Use the Information Below for the Following Problem(S)

question 59

Multiple Choice

Exhibit 20.5
Use the Information Below for the Following Problem(S)
Sarah Kling bought a 6-month Peppy Cola put option with an exercise price of $55 for a premium of $8.25 when Peppy was selling for $48.00 per share.
-Refer to Exhibit 20.5.If at expiration Peppy is selling for $42.00,what is Sarah's dollar gain or loss?

• A) $420 gain
• B) $420 loss
• C) $475 loss
• D) $475 gain
• E) None of the above

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Definitions:

Choroid

A layer of the eye between the retina and the sclera, rich in blood vessels, providing oxygen and nourishment to the outer layers of the retina.

Lens

A transparent structure in the eye that focuses light rays onto the retina, enabling clear vision.

Suspensory Ligaments

Fibrous tissues that connect the lens of the eye to the ciliary body, adjusting the lens shape for focusing.

Retina

The light-sensitive layer at the back of the eye, containing cells that detect light and colors, converting them into electrical signals sent to the brain.