Cara Wrote a Put Option Contract on EZ Stock with an Exercise

question 33

Multiple Choice

Cara wrote a put option contract on EZ stock with an exercise price of $40 per share and an option price of $.65 per share. Today, the contracts expire and the stock is selling for $34.30 a share. What is the net profit on this investment? Ignore trading costs and taxes.

• A) −$635.00
• B) $50.50
• C) $635.00
• D) $63.50
• E) −$505.00

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Definitions:

Noncontrolling Interest

The portion of equity in a subsidiary not owned by the parent company, also known as minority interest.

Domestic Corporations

Corporations that are incorporated and operate in the same country in which they are registered.

Consolidated Income Tax Return

A single income tax return filed by a parent company on behalf of itself and its subsidiaries, consolidating their income and taxes as one entity.

Domestic Corporations

Domestic corporations are businesses that are registered, incorporated, or formed within a specific country and operate under its laws.