Which One of the Following Situations Will Produce the Highest

question 51

Multiple Choice

Which one of the following situations will produce the highest put price, all else constant? Assume the options are all in the money.

• A)$15 strike price; 45 days to option expiration
• B)$15 strike price; 60 days to option expiration
• C)$20 strike price; 45 days to option expiration
• D)$20 strike price; 60 days to option expiration
• E)Insufficient information is provided to answer this question.

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Definitions:

Tax Bases

The value of assets, liabilities, or transactions that is used for tax purposes, determining the taxable amount on which tax rates are applied.

Carrying Values

The amount at which an asset is recognized on the balance sheet after deducting any accumulated depreciation and impairment charges.

Deferred Tax Account

An account on a company’s balance sheet that is a provision for income taxes that have been accrued but are not yet due.

Unrealized Profits

Profits that have been earned but not yet realized through a transaction, such as an increase in value of an investment that has not been sold yet.