A Put Option on a Stock Has an Exercise Price

question 19

Multiple Choice

A put option on a stock has an exercise price of $31.If the stock price at expiration is $29.45,what is the option payoff for a long put position?

• A)$29.45
• B)$0
• C)$1.55
• D)-$1.55
• E)-$29.45

---

Definitions:

Future Value

The estimated amount of money an investment is projected to grow to, based on a specified rate of interest or return over a set period.

Present Value

The current estimation of a future quantity of money or sequences of cash inflows, figured with an explicit rate of return.

Serial Bonds

Bonds that mature in installments at regular intervals over a period of time rather than having a single maturity date.

Debenture Bonds

Unsecured bonds that rely on the creditworthiness and reputation of the issuer for support, rather than collateral.