Exhibit 13-8
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 34

Multiple Choice

Exhibit 13-8
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\begin{array}{c}\quad\quad\quad\quad\text { XYZ CORP }\\\begin{array}{cccc}\hline &{ \quad\quad\quad\text { EXERCISE } } & & { \quad\quad\quad\text { NYSE } } \\\hline&\text { DATE } & \text { PRICE } & \text { PRICE } & \text { CLOSE } \\\hline \text {CALLS } & \text { OCT } & 85 & 163 / 4 & 10111 / 16 \\&\text { OCT } & 90 & 12 & 10111 / 16 \\&\text { OCT } & 95 & 75 / 8 & 10111 / 16 \\ \text { PUTS } &\text { OCT } & 85 & 1 / 8 & 10111 / 16 \\&\text { OCT } & 90 & 3 / 8 & 10111 / 16 \\&\text { OCT } & 95 & 13 / 16 & 10111 / 16\end{array}\end{array}$
-Refer to Exhibit 13-8. If you establish a long strap using the options with an 90 exercise price, what is your dollar gain or loss if at expiration XYZ is still trading at 101 11/16?

• A) $37.50 loss
• B) $37.50 gain
• C) $100.00 loss
• D) $100.00 gain
• E) $2,437.50 loss

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Definitions:

Property Rights

Legal rights to use, derive benefit from, and transfer property.

Negative Externality

An adverse effect or cost suffered by a third party due to an economic transaction they were not involved in.

Government Standards

Official requirements established by governmental bodies that products, services, or processes must meet, often related to quality, safety, or compatibility.

Emission Reductions

The process of lessening the amount of pollutants released into the atmosphere, often targeting greenhouse gases to combat climate change.