The Market Price of Jasper, Inc

question 442

Multiple Choice

The market price of Jasper, Inc. is quite volatile and uncertainty concerning some merger activity is expected to keep the stock price volatile for the next few weeks. Given this situation, you decide to
Buy both a one-month put and a one-month call option on this stock with an exercise price of
$42) 50. You purchased the call at a quoted price of $.45 and the put at a price of $2.25. What will
Be your total profit or loss on this investment if the stock price is $34.50 on the day the options
Expire?

• A) -$1,070
• B) -$930
• C) -$45
• D) $530
• E) $575

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Definitions:

Normal Curve

A bell-shaped curve that represents the distribution of a set of data where most occurrences take place around the central peak, and the probabilities of extreme variations taper off equally on both sides.

Intelligence Test Scores

Intelligence test scores are quantitative measures assessing an individual's cognitive abilities and potential compared to a normative population.

Bell-Shaped Pattern

A graphical representation of data that resembles the shape of a bell, typically illustrating a normal distribution in statistical analyses.

Stanford-Binet

An intelligence test that assesses cognitive abilities and IQ, originally developed by Alfred Binet and later revised at Stanford University.