You Own 100 Shares of Deltona Stock Which Is Currently

question 69

Multiple Choice

You own 100 shares of Deltona stock which is currently worth $43 a share.You just paid an option premium of $0.85 to buy one put contract on this stock with a strike price of $40.What is the maximum loss per share you are avoiding by purchasing the option contract?

• A)$40.00
• B)$40.85
• C)$42.15
• D)$43.00
• E)$43.85

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Definitions:

Increases

A term indicating a rise or growth in quantity, size, number, or extent.

Negative Correlation

A dynamic between two variables where an increase in one leads to a decrease in the other.

Oatmeal

A cereal made from oats, boiled in water or milk, and often served as a breakfast dish.

Coefficient of Alienation

A statistical measure that illustrates the lack of correlation between two variables.