You Purchased a Stock and a Put Option on the Stock

question 45

Multiple Choice

You purchased a stock and a put option on the stock with an exercise prices of $40 a share.What will be the value of your position when the option expires if the stock price is $28 a share?

• A) $40
• B) $28
• C) $12
• D) $32

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Definitions:

Equivalent Economic Position

A financial strategy or situation where two different financial instruments or situations have the same economic value or return.

Payments

Transactions or exchanges of money between two parties, often for goods or services rendered.

Compounded Monthly

Interest calculation method where interest is added to the principal balance monthly, affecting future interest accrual.

Payment Stream

A series of two or more payments required by a single transaction or contract.