If a Microsoft January 20 Put Option with a Strike

question 152

Multiple Choice

If a Microsoft January 20 put option with a strike price of $20 were about to expire and the market price of the underlying Microsoft stock was $15.00, the price of the put option would have to be __________ to eliminate arbitrage opportunities.

• A)$1.00
• B)$2.00
• C)$4.00
• D)$6.00
• E)none of the above.

Identify the impacts of competitive factors on pricing decisions.

Distinguish between cost-oriented, demand-oriented, and competition-oriented pricing approaches.

Analyze the role of target return-on-investment (ROI) in setting prices.

Recognize the importance of customary pricing in certain markets.

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Definitions:

Rosy

Characterized by a hopeful or optimistic perspective, often without considering possible difficulties.

Superstitious Methods

Practices based on belief in luck, magic, or the supernatural, often without scientific basis.

Social Learning Theory

A theory suggesting that individuals learn new behaviors through observing and imitating others, along with the influence of rewards and punishments.

Reinforcement

In psychology, a process by which a behavior is encouraged to occur more frequently by rewarding it or decreasing the likelihood of its occurrence with punishment.