Several Rumors Concerning Wyslow,Inc

question 8

Multiple Choice

Several rumors concerning Wyslow,Inc. stock have started circulating. These rumors are causing the market price of the stock to be quite volatile. Given this situation,you decide to buy both a one-month put and a one month call option on this stock with an exercise price of $15. You purchased the call at a quoted price of $.40 and the put at a price of $2.30. What will be your total profit or loss on these option positions if the stock price is $4 on the day the options expire?

• A) $190
• B) $230
• C) $830
• D) $910
• E) $1,500

---

Definitions:

Book Values

A term used in accounting to refer to the value of an asset as reported on the company's balance sheet, calculated as the cost of an asset minus any depreciation or amortization.

Original Costs

The initial amount spent to acquire an asset, including purchase price and all expenses incurred to bring the asset to its intended use.

Written Agreement

A formal contract which outlines the terms and conditions between parties in written form.

Income and Losses

A financial term encompassing the total earnings (income) and deductions (losses) affecting the net profitability of a business over a specific period.