The Price of a Stock on February 1 Is $84

question 4

Multiple Choice

The price of a stock on February 1 is $84.A trader buys 200 put options on the stock with a strike price of $90 when the option price is $10.The options are exercised when the stock price is $85.The trader's net profit or loss is

• A) Loss of $1,000
• B) Loss of $2,000
• C) Gain of $200
• D) Gain of $1000

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Definitions:

Capital Surplus

Capital surplus refers to the amount that a company raises from the sale of its shares above their par value, often reflecting additional investment or gains retained in the business.

Legal Capital

The portion of a company's equity that cannot be distributed to shareholders and must be maintained as a financial protection for creditors.

Market Value

The current price at which an asset or service can be bought or sold in an open market.

U.S. Economy

The economic system of the United States characterized by private enterprise, a variety of industries, and is the largest national economy in nominal terms.