A Stock Is Currently Priced at $35 a Share While

question 32

Multiple Choice

A stock is currently priced at $35 a share while the $40 put option is priced at $5.22.The put option delta is -0.14.What is the approximate put price if the stock increases in value to $38?

• A) $3.76
• B) $4.47
• C) $5.08
• D) $5.27
• E) $5.50

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Definitions:

Revenue Recognition

The accounting principle governing the specific conditions under which revenue is recognized or recorded.

Nonrefundable Up-Front Fees

Payments made upfront for services that will not be returned, even if the service or product is not used or delivered as expected.

GAAP

Generally Accepted Accounting Principles; a set of accounting standards and practices used to prepare financial statements in the U.S.

Service Contract

A service contract is a legally binding agreement between two parties where one agrees to provide a specified service to the other for a payment.