Suppose an Investor Buys One Share of Stock and a Put

question 48

Multiple Choice

Suppose an investor buys one share of stock and a put option on the stock. What will be the value of her investment on the final exercise date if the stock price is below the exercise price? (Ignore transaction costs.)

• A)The value of two shares of stock.
• B)The value of one share of stock plus the exercise price.
• C)The exercise price.
• D)The value of one share of stock minus the exercise price.

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Definitions:

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