Calculate the Return on Exercising a Put Option That Was

question 111

Multiple Choice

Calculate the return on exercising a put option that was purchased for $10, with an exercise price of $85.The stock price at expiration is $81.

• A)(60%)
• B)60%
• C)30%
• D)(30%) Proceeds = exercise price - stock price
• = 85 - 81 = $4
• Profits = proceeds - original investment
• = 4 - 10 = -$6

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Definitions:

Innate Patterns

Refers to behaviors or actions that are genetically hardwired and manifest without the need for learning or experience.

Biologically Determined

Traits, behaviors, or characteristics that are influenced by genetic makeup rather than environmental factors.

Instinct

Natural, unchanging behaviors exhibited by animals in reaction to specific triggers.

Drive-Reduction

A theory of motivation that posits the reduction of physiological needs drives behavior towards achieving homeostasis.