You Want the Right,but Not the Obligation,to Sell 300 Shares

question 17

Multiple Choice

You want the right,but not the obligation,to sell 300 shares of ZZ Industries stock at a price of $30.00 a share.How much will it cost you to establish this option position?

• A) $3.00
• B) $3.20
• C) $3.60
• D) $3.78
• E) $3.82

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Definitions:

Covariances

A measure of the degree to which two variables move in relation to each other.

Mean-Variance Efficient

A portfolio construction strategy that aims to achieve the highest expected return for a given level of risk by optimizing the mix of investments.

Expected Returns

The anticipated return on an investment, based on historical averages or statistical analyses.

Variances

Statistical measures that represent the dispersion of data points in a data set relative to its mean, indicating how spread out the data is.