A Speculator Purchases a Put Option for a Premium of $4

question 43

Multiple Choice

A speculator purchases a put option for a premium of $4, with an exercise price of $30. The stock is presently priced at $29 and rises to $32 before the expiration date. What is the stock price at which the speculator would break even? ​

• A)$26
• B)$34
• C)$28
• D)$29
• E)$32

Recognize the components and structure of the stockholders' equity section in a corporation's balance sheet.

Understand the preferences and rights of preferred stock versus common stock.

Comprehend the roles and responsibilities of the board of directors and officers in a corporation.

Calculate key financial figures such as total paid-in capital and total stockholders' equity from given financial data.

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Definitions:

Federal Income Tax

The tax levied by the IRS on the annual earnings of individuals, corporations, trusts, and other legal entities.

FUTA Taxes

Federal Unemployment Tax Act (FUTA) taxes are federal employer taxes that contribute to state workforce agencies to fund unemployment benefits.

Tax Liability

The total amount of tax owed by an individual, corporation, or other entity to a taxing authority.

Quarter

A three-month period on the financial calendar that corporations use to report their earnings and performance, commonly divided into Q1, Q2, Q3, and Q4.