You Purchased Four Put Option Contracts with a Strike Price

question 40

Multiple Choice

You purchased four put option contracts with a strike price of $35 and a premium of $0.80.What is the total net amount you will receive for your shares if you exercise this contract when the underlying stock is selling for $31.50 a share?

• A) $13,680
• B) $14,700
• C) $15,740
• D) $16,340
• E) $16,400

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Definitions:

Invested

The allocation of resources, typically money, into ventures with the expectation of generating income or profit.

Interest

The cost of borrowing money or the earnings from lending money, calculated as a percentage of the principal amount.

Simple Interest Rate

A rate used to calculate the interest charge on a loan over a specific period of time, not accounting for the effect of compounding.

Investment

The act of distributing funds or resources in anticipation of earning profits or income.