Suppose That a Stock Sells at a Price of $50

question 74

Multiple Choice

Suppose that a stock sells at a price of $50 on the expiration date. Compute the price of a put option if the option strike price is $80.

• A) $20
• B) $30
• C) $40
• D) $50

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Definitions:

Expense

Money spent or cost incurred in an entity's efforts to generate revenue, representing the cost of doing business.

Trial Balance

An accounting report that lists the balances of all general ledger accounts at a particular point in time to check the accuracy of bookkeeping entries.

Income Statement

A financial statement that shows a company's revenues, expenses, and profit over a specific period.

Retained Earnings

The portion of a company’s profits that is retained within the business rather than distributed to shareholders as dividends.