USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 103

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

-Refer to Exhibit 16.1. If the spot rate at expiration is $0.75 and the put option was purchased, what is the dollar gain or loss?

• A) $0
• B) $200 loss
• C) $200 gain
• D) $3160 gain
• E) $1187 loss

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Definitions:

Mutually Exclusive

A characteristic of events that cannot occur at the same time, indicating a clear separation or distinction between them.

Collectively Exhaustive

A property of a set of events that ensures all possible outcomes are covered, leaving no possibility out.

Probability

A numerical measure of the likelihood of a specific event occurring, ranging from 0 to 1.

Mutually Exclusive

Mutually exclusive refers to events in probability and statistics that cannot occur at the same time, indicating that the occurrence of one event necessarily excludes the occurrence of the other.