A Strategy Consists of Buying a Market Index Product at $830

question 10

Multiple Choice

A strategy consists of buying a market index product at $830 and longing a put on the index with a strike of $830.If the put premium is $18.00 and interest rates are 0.5% per month,what is the profit or loss at expiration (in 6 months) if the market index is $810?

• A) $20.00 gain
• B) $18.65 gain
• C) $36.29 loss
• D) $43.76 loss

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Definitions:

DSS

Stands for Decision Support System, which is a computerized program used to support determinations, judgments, and courses of action in an organization or a business.

Drill-down

The process of exploring detailed data by moving from high-level summaries to more detailed views, often used in reporting and data analysis.

Ad Hoc

A term describing solutions designed for a specific problem or task, without considering wider application.

Comparative

Relating to or involving the comparison of two or more entities to assess their similarities and differences.