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

question 1

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.What is Sarah's annualized gain/loss?

• A) 11.51% gain
• B) 115.15% gain
• C) 11.51% loss
• D) 115.15% loss
• E) None of the above

Understand basic probability concepts and the principle of sample spaces.

Distinguish between dependent and independent events in probability.

Calculate probabilities for simple and compound events.

Identify and apply the rules for calculating the complement of an event.

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Definitions:

Machine Hour

A unit of measure representing the operation of a machine for one hour, often used in cost accounting to allocate expenses.

Power Costs

Expenses related to the consumption of energy or electricity in the production or operation of a business.

Simplest Algorithm

The most basic and straightforward method for solving a problem or performing a computation.

Kilowatt Hours

A unit of energy equivalent to one kilowatt of power expended for one hour, commonly used to measure electricity consumption.