Jillian Owns an Option Which Gives Her the Right to Purchase

question 77

Multiple Choice

Jillian owns an option which gives her the right to purchase shares of WAN at a price of €20 a share.Currently,WAN equity is selling for €24.50.Jillian would like to profit on this share but is not permitted to exercise her option for another two weeks.Which of the following statements apply to this situation?
I.Jillian must own a European call option.
II.Jillian must own an American put option.
III.Jillian should sell her option today if she feels the price of WAN will decline significantly over the next two week.
IV.Jillian cannot profit today from the price increase in WAN.

• A)I and III only.
• B)II and IV only.
• C)I and IV only.
• D)II and III only.
• E)I,III,and IV only.

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