You Purchased 7 Put Option Contracts on Alto Industries

question 67

Multiple Choice

You purchased 7 put option contracts on Alto Industries. The strike price was $42.50 and the option premium was $1.30. On the expiration date, the stock was valued at $41.40 a share. What is the payoff on the option contracts?

• A)−$140
• B)$0
• C)$110
• D)$360
• E)$770

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Definitions:

Encoding

In psychology, the process of converting information into a form that can be stored in memory, initiating the process of creating a new memory.

Selective Attention

The cognitive process of focusing on a particular object or task, while ignoring irrelevant information.

Cognitive Abilities

Mental capabilities involved in learning, reasoning, problem solving, and adapting to new situations.

Encoding

The first step of transforming data into a format that can be preserved in memory.