What Is the Fundamental Value of a Put Contract with a Strike

question 3

Multiple Choice

What is the fundamental value of a put contract with a strike price of $25 when the option price is $150 and the underlying common stock sells for $26?

• A) $150
• B) $100
• C) $0.00
• D) -$100

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Definitions:

World Market

The global arena where goods, services, and financial assets are traded across countries.

Monopsony

A market structure in which there is only a single buyer of a good, service, or resource.

Minimum Wage

The lowest legal salary that workers can be paid by employers, set by government law or policy.

Nominal Wage

Refers to the wage paid to labor in current dollars, without adjustment for inflation, representing the face value of payments received.