Due to Technological and Market Developments,the Price of Beta Stock

question 103

Multiple Choice

Due to technological and market developments,the price of Beta stock has become quite volatile.Given this,you decide to buy two one-month put option contracts and two one-month call option contracts on this stock with an exercise price of $15.You purchased the calls at a quoted price of $.40 and the puts at a price of $2.30.What will be your total profit on these positions if the stock price is $29 on the day the options expire?

• A)$1,890
• B)$2,720
• C)$2,260
• D)$1,130
• E)$1,360

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Definitions:

Balance Sheet

An accounting statement that itemizes the total assets, liabilities, and equity of shareholders at a defined date.

Accounts Payable

Liabilities owed by a business to its suppliers or vendors for goods and services purchased on credit.

Net Income

The earnings a company retains following the deduction of all costs and taxes from its revenue.

Rent Expense

The cost incurred by a business to use property or equipment for business purposes.