You Purchased Six Put Option Contracts with a Strike Price

question 60

Multiple Choice

You purchased six put option contracts with a strike price of $29.50 and a premium of $.95. At expiration, the stock was selling for $26.70 a share. What is the total net amount you received for your shares assuming that you disposed of your shares on the expiration date?

• A)$17,955
• B)$17,100
• C)$17,045
• D)$17,815
• E)$17,130

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Definitions:

Conversion Premium

The additional amount over the current value that an investor pays to convert a convertible security into a specified number of shares of common stock.

Conversion Ratio

The specific quantity of common shares an investor can receive for converting each unit of a convertible security, such as a convertible bond or preferred stock.

Par Value

The face value of a bond or stock, typically the amount that is paid back at maturity for bonds or a nominal dollar value assigned to shares of stock.

Coupon Bond

A type of bond that offers interest payments to the holder at specified intervals until the bond's maturity.