You Own Five Put Option Contracts on XYZ Stock with an Exercise

question 15

Multiple Choice

You own five put option contracts on XYZ stock with an exercise price of $25. What is the total intrinsic value of these contracts if XYZ stock is currently selling for $24.50 a share?

• A) -$250
• B) -$50
• C) $0
• D) $50
• E) $250

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Definitions:

Breach of Contract

Occurs when one party in a binding agreement fails to deliver according to the terms of the contract.

Act of Bankruptcy

A specific action or failure to act that renders an individual or entity legally insolvent, triggering potential bankruptcy proceedings.

Unsecured Creditors

Creditors who have loaned money without obtaining specific collateral, meaning they have no special claim to the borrower's assets if the borrower fails to pay.

Bankruptcy Discharge

The legal process that releases a debtor from personal liability for certain specified types of debts, effectively wiping the slate clean.