With the Price of the Stock at $60 Per Share,a

question 3

Essay

With the price of the stock at $60 per share,a put option is purchased with an exercise price of $58 per share.The option is exercised after the stock is purchased at $52 per share and results in a gain of 50 percent.What was the price of the option? Ignore taxes and brokerage commissions.
(a)$400
(b)$600
(c)$300
(d)$200

---

Definitions:

Least Squares Regression

A statistical method used to find the best-fitting line through a set of points by minimizing the sum of the squares of the vertical distances of the points from the line.

Calories

Calories are units of energy used to quantify the amount of energy stored in food and how much energy is utilized by the body.

Sugar

A sweet-tasting, soluble carbohydrate found in many plants, which is commonly used as a sweetener in food.

Slope

The measure of the steepness or incline of a line, defined as the ratio of the vertical change to the horizontal change between two points on the line.