You Purchased a Stock for $36 a Share, a Call

question 62

Multiple Choice

You purchased a stock for $36 a share, a call option with an exercise price of $35 and a premium of $3, and a put option with an exercise price of $35 and a premium of $2. What will be your net profit if you close out all three positions when the stock is selling for $37 a share?

• A) -$2
• B) $3
• C) -$1
• D)$2

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Definitions:

Proxy

A document authorizing a person to vote on another's behalf at shareholder meetings, or the individual authorized to do so.

Preemptive Right

A shareholder's right to buy new shares in a company before they are offered to the public, to maintain their proportionate ownership in the company.