Which of the Following Is Correct for the Owner of a September

question 101

Multiple Choice

Which of the following is correct for the owner of a September put,valued at $20,on CBA Corp.with a strike price of $80? CBA currently trades at $67.

• A) The option will continue to gain value until its September expiration.
• B) The owner profits $13 per share by exercising now.
• C) Further decreases in CBA stock price will be translated directly into additional option value.
• D) $20 is the maximum value for this option.

---

Definitions:

Stockholders' Equity

The ownership interest of shareholders in the assets of a corporation, after all liabilities have been subtracted.

Accounts Payable

The amounts owed by a business to its suppliers or creditors for goods and services received, representing short-term liabilities.

Accounts Receivable

Funds that are due to a company from its clients for the delivery of goods and services which payment is pending.

Net Assets

The total assets of a company minus its total liabilities; a measure of its financial health and value.