You Own 300 Shares of Stock Which You Would Like

question 27

Multiple Choice

You own 300 shares of stock which you would like to have the right to sell at $40 a share.The 40 call option is quoted at $0.35 bid,$0.40 ask.The 40 put is quoted at $0.45 bid,$0.50 ask.How much will it cost you to obtain the right to sell all of your shares at $40 a share?

• A) $135
• B) $50
• C) $150
• D) $105
• E) $75

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Definitions:

Long-Term Securities

Financial instruments or investments that are meant to be held or mature over a period longer than one year.

Capital Markets

Markets where individuals and institutions trade financial securities, including stocks and bonds, over long periods.

Maturities

The specific dates on which the principal or nominal amounts of financial instruments like bonds or loans are due to be paid to holders.

Short-Term Securities

Financial instruments, such as Treasury bills or commercial paper, that have maturities of one year or less.