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From the Perspective of the Writer of a Put Option

question 35

Multiple Choice

From the perspective of the writer of a put option written on €62,500.If the strike price is $1.55/€,and the option premium is $1,875,at what exchange rate do you start to lose money?


Definitions:

Sale

The act of selling a product or service in exchange for money or other compensation.

Equity Securities

Financial instruments that represent ownership interest in a company, such as stocks.

Significant Influence

The power to participate in the financial and operating policy decisions of an investment but is not control or joint control of those policies.

Voting Stock

Shares that grant the holder the right to vote on company matters, such as electing the board of directors.

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