A Speculator Purchased a Put Option with an Exercise Price

question 76

Multiple Choice

A speculator purchased a put option with an exercise price of $56 for a premium of $10. The option was exercised a few days later when the stock price was $44. What was the return to the speculator?

• A)-20 percent
• B)120 percent
• C)-100 percent
• D)20 percent

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Definitions:

Peaks

Points of maximum amplitude or intensity, often used in the context of graphs or spectra.

Conditional Probabilities

The probability of an event occurring given that another event has already occurred, often symbolized as P(A|B).

State Contracts

Agreements entered into by state governments for the procurement of goods and services or for undertaking projects.

Construction Company

A business entity engaged in the building, design, or execution of construction projects such as buildings, roads, or bridges.