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

question 9

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 $47.00,what is Sarah's dollar gain or loss?

• A) $25 loss
• B) $250 loss
• C) $25 gain
• D) $250 gain
• E) None of the above