In January, JB Stock Was Selling for $50 Per Share

question 16

Multiple Choice

In January, JB stock was selling for $50 per share. When the calls and the puts with a strike price of $45 expired on March 20, JB was selling at $46. Which investors made a profit?
I. the writer of the call
II. the buyer of the call
III. the writer of the put
IV. the buyer of the put

• A) II and III
• B) I and III
• C) only III
• D) II and IV

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Definitions:

Additional Satisfaction

The joy or utility gained from consuming one more unit of a good or service.

Diminishing Rate

A principle stating that as one factor of production increases, while others stay constant, the resulting increase in output will eventually decrease.

Total Utility

The entire pleasure derived from using a certain total volume of a good or service.

Total Utility

Total utility is the total satisfaction or benefit a consumer receives from consuming a particular quantity of goods or services.