A 3-Month Put Has a Strike Price of $50

question 58

Multiple Choice

A 3-month put has a strike price of $50. The underlying stock's price is $48.75. What is the intrinsic value of this put?

• A)$0
• B)$.90
• C)$1.25
• D)$2.30
• E)$3.60

---

Definitions:

Marginal Rate

The rate at which one variable changes with respect to a minute increase in another variable, often used in the context of marginal tax rates or marginal rates of substitution in economics.

Market Basket A

A selected set of goods and services used to monitor changes in price levels over time, often for the purpose of calculating inflation.

Utility Maximizing

The act of choosing the combination of goods and services that maximizes a consumer's satisfaction or happiness with a given income.

Marginal Utility

The additional satisfaction or utility received by consuming one more unit of a good or service.