You Purchased a Stock for $43 a Share, a Call

question 3

Multiple Choice

You purchased a stock for $43 a share, a call option with an exercise price of $40 and a premium of $5, and a put option with an exercise price of $45 and a premium of $4. What will be your net profit if you close out all three positions when the stock is selling for $48 a share?

• A) -$9
• B) -$4
• C) $5
• D)$4

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Definitions:

Statistically Significant

A mathematical indication that a result is not likely to have occurred by chance, suggesting a true difference or effect exists.

Rosenthal Effect

The general finding that the results of any experiment often conform to the expectations of the experimenter.

Masked Design

A research design where the participants do not know which treatment group they are in to prevent bias; also known as blind design.

Placebo Effect

The phenomenon where an individual experiences a perceived improvement in condition or symptoms after receiving a treatment that has no therapeutic effect.