The Profit or Loss on a Short Put at Expiry

question 14

Multiple Choice

The profit or loss on a short put at expiry is equal to:

• A)Option premium - (maximum of (X - S)or zero)
• B)Option premium + (maximum of (X - S)or zero)
• C)Option premium - (maximum of (S - X)or zero)
• D)Option premium + (maximum of (S - X)or zero).
• E)Cannot be negative.

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Definitions:

Federal Budget Deficits

The fiscal situation where the government's expenditures surpass its revenues in a given fiscal year.

Federal Spending

Expenditures by the federal government on goods, services, and obligations, including defense, welfare, and interest on the debt.

Functional Finance

A theory that government budgetary policy should primarily focus on ensuring economic stability and stimulating demand to achieve full employment, rather than solely aiming to balance budgets.

National Debt

The total amount of money that a country's government has borrowed by various means.