Corine Ltd,a Trader Bought a December Put Option for 10 $\begin{array}{l}\text { Dr Investment in options contract } &\$ 39500\\\text { Cr } \quad \text { Cash at Bank }&& \quad \$ 39500\end{array}$

question 7

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) \(\begin{array}{l}
• \text { Dr Investment in options contract } &\$ 39500\\
• \text { Cr } \quad \text { Cash at Bank }&& \quad \$ 39500
• \end{array}\)
• B) \(\begin{array}{l}
• \text { Dr Investment in options contract } &\$ 3950\\
• \text { Cr } \quad \text { Cash at Bank }&& \quad \$ 3950
• \end{array}\)
• C) \[\begin{array} {llc }
• \text { Dr } & \text { Cash at Bank } & \$ 39500 \\
• \mathrm { Cr }&\text { Investment in options contract } & &\$ 39500
• \end{array}\]
• D) \[\begin{array} { c c c }
• \text { Dr } & \text { Cash at Bank } & \$ 3950 \\
• \text { Cr } & \text { Investment in options contract } && \$ 3950
• \end{array}\]

---

Definitions:

Supply Decrease

A supply decrease refers to a situation where the quantity of a good or service that producers are willing and able to sell at a given price level falls, often due to factors like increased production costs or regulatory changes.

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price, where market supply and demand balance each other.

Supply Decrease

A situation in economics where the amount of a certain good or service that producers are willing to provide at a specific price level reduces.

Demand Decrease

A reduction in the quantity of a good or service that consumers are willing and able to purchase at various prices.