Three Months Back You Bought for $4 a Put Option

question 93

Multiple Choice

Three months back you bought for $4 a put option on a stock with an exercise price of $100.If the stock price at expiration of this option is $92, what is your return on investment?

• A)200 percent
• B)150 percent
• C)100 percent
• D)50 percent Proceeds = Stock price - Exercise price
• 100 - 92 = $8
• Profits = proceeds - original investment
• = 8 - 4 = $4

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Definitions:

American Depository Receipts

Securities that represent shares in foreign public companies and are traded on U.S. stock exchanges, allowing investors to invest in overseas stocks more easily.

World Equity Benchmark Shares

Exchange-traded funds that aim to provide investment results that, before fees and expenses, correspond to the price and yield performance of specific international equity indexes.

ADRs

American Depositary Receipts, a way for investors to own shares in foreign companies, where the shares are held by a US financial institution overseas and traded on American exchanges.

WEBS

Exchange-traded funds that track international stock market indices, allowing investors to diversify their portfolios globally.