An Investor Has Exchange-Traded Put Options to Sell 100 Shares

question 19

Multiple Choice

An investor has exchange-traded put options to sell 100 shares for $20.There is 25% stock dividend.Which of the following is the position of the investor after the stock dividend?

• A) Put options to sell 100 shares for $20
• B) Put options to sell 75 shares for $25
• C) Put options to sell 125 shares for $15
• D) Put options to sell 125 shares for $16

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Definitions:

Random Variable

A variable whose outcomes depend on the results of a random phenomenon, and which can take on different values with certain probabilities.

Poisson Distribution

A distribution of probability that denotes the likelihood of a specific number of occurrences happening within a set period of time or space.

Discrete Distribution

A statistical distribution that shows the probabilities of outcomes with finite values or countable outcomes.

Interval of Time

A specific duration or length of time between two points or events.