The Price of a Stock Is $67

question 7

Multiple Choice

The price of a stock is $67.A trader sells 5 put option contracts on the stock with a strike price of $70 when the option price is $4.The options are exercised when the stock price is $69.What is the trader's net profit or loss?

• A) Loss of $1,500
• B) Loss of $500
• C) Gain of $1,500
• D) Loss of $1,000

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company.

Advertising Expense

Costs incurred in promoting products, services, or the brand as a whole, typically classified as operating expenses on the income statement.

Gross Sales

The total sales generated by a business before any deductions are made for returns, allowances, and discounts.

Indirect Advertising Expenses

Costs not directly associated with specific advertising campaigns but related to broader promotional activities, such as salaries of marketing staff or general promotional materials.