Assume That You Have Just Sold a Stock for a Loss

question 80

Multiple Choice

Assume that you have just sold a stock for a loss at a price of $75 for tax purposes. You still wish to maintain exposure to the sold stock. Suppose that you sell a put with a strike price of $80 and a price of $7.25. Calculate the effective price paid to repurchase the stock if the price after 35 days is $70.

• A) $77.75
• B) $87.25
• C) $82.25
• D) $72.75
• E) $85.25

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Definitions:

Judgment

The capacity to reach thoughtful decisions or arrive at logical conclusions.

Autonomy

The right or condition of self-government, in personal decision-making, implying the capacity to make an informed, uncoerced decision.

Utilitarianism

A theory in ethics that prescribes actions that maximize happiness and well-being for the majority of a population.

Responsibility

The duty or obligation to perform or complete a task, often with the implication of accountability for the outcome.