You Purchased 6 Put Option Contracts on Mountain Builders Stock

question 98

Multiple Choice

You purchased 6 put option contracts on Mountain Builders stock at an option premium of $0.75. The strike price is $25. What is your break-even stock price?

• A) $19.90
• B) $24.25
• C) $25.00
• D) $25.75
• E) $30.10

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Definitions:

Null Hypothesis

A default assumption in statistical hypothesis testing that there is no effect or no difference, used as a basis for testing statistical significance.

Test Statistic

A statistic calculated from sample data, used to determine the p-value in hypothesis testing.

Degrees Of Freedom

The number of independent values or quantities that can vary in the calculation of a statistic.

Null Hypothesis

A statement that there is no effect or no difference, which is tested statistically to be either rejected or not rejected based on data.