Suppose an Investor Sells a Put Option Over XYZ Shares

question 45

Multiple Choice

Suppose an investor sells a put option over XYZ shares.What will happen if the share price on the exercise date exceeds the exercise price?

• A)The seller will need to deliver XYZ shares to the owner of the option.
• B)The seller will be obliged to buy shares from the owner of the option.
• C)The option owner will not exercise his/her option.
• D)The seller can sell XYZ shares for the exercise price.
• E)None of these.

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Definitions:

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated as the beginning inventory plus purchases minus the cost of goods sold.

Cost of Goods Sold

The direct costs tied to the production of the goods sold by a company, including materials and labor.

Beginning Inventory

The value of a company's inventory at the start of an accounting period, crucial for calculating the cost of goods sold.

Cost of Goods Sold

This accounting term refers to the direct costs attributable to the production of the goods sold by a company, including labor, material, and overhead costs.