Corine Ltd,a Trader Bought a December Put Option for 10 $\quad\$ 39500$

question 1

Multiple Choice

Corine Ltd,a trader bought a December put option for 10 $100 000 10% treasury bonds at a premium of $3.95 on January 1,2010.Year end for Corine is 30 June when the price for a December put option for $100 000 10% treasury bonds is $3.50.
What was the initial journal entry to record the option?

• A) Dr Investment in options contract \(\quad\$ 39500\)
• CrCash at Bank\(\quad\$ 39500\)
• B) Dr Investment in options contract \(\quad \$ 3950\)
• Cr Cash at Bank \(\quad\$ 3950\)
• C) \(\begin{array}{lr}
• \text { Dr } \quad \text { Cash at Bank } & \$ 39500 \\
• \text { Cr Investment in ootions contract } & \$ 39500
• \end{array}\)
• D) \(\begin{array} { c c c }
• \text { Dr } \text { Cash at Bank } & \$ 3950 \\
• \text { Cr Investment in options contract } & \$ 3950
• \end{array}\)

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