Use These Option Quotes to Answer This Question

question 61

Multiple Choice

Use these option quotes to answer this question:

-You want the right,but not the obligation,to sell 400 shares of ZZ Industries stock at a price of $32.50 a share.How much will it cost you to establish this option position?

• A) $3.50
• B) $4.00
• C) $3.60
• D) $3.78
• E) $3.82

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Definitions:

Exchange Rates

The value of one currency for the purpose of conversion to another, determining how much one currency is worth in terms of the other.

Forward Exchange Contract

An agreement to exchange currencies at a specified rate on a predetermined future date, used to hedge against currency risk.

Net Income

The net income of a company, calculated by deducting all costs and taxes from the overall revenue.

Local Currency Units

Local currency units refer to the currency that is legal tender in a country's domestic economy and used to present financial information.