Rosalita Purchased a Put Option with a Strike Price of $40

question 38

Multiple Choice

Rosalita purchased a put option with a strike price of $40. She paid a total of $140 for the contract. What is the break-even stock price?

• A) $38.40
• B) $39.60
• C) $40.00
• D) $41.60
• E) $42.80

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Definitions:

Horizontal Analysis

A financial analysis technique that compares historical financial data over a series of reporting periods, using a base year as a comparison.

Vertical Analysis

A method of financial statement analysis in which each entry for each of the three major categories of accounts (assets, liabilities, and equities) in a balance sheet is represented as a proportion of the total account.

Percentage Analysis

A financial analysis technique that evaluates the proportion or percentage change of individual components in financial statements over time.

Adjusting Entry

Accounting records created at the closing of a fiscal period to distribute expenses and revenues to the time they were truly incurred.