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

question 47

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 95 exercise price, what is your dollar gain or loss if at expiration XYZ is still trading at 101 11/16?

• A) $81.25 loss
• B) $1,606.25 gain
• C) $1,606.25 loss
• D) $268.75 loss
• E) $268.75 gain

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Definitions:

Insider Information

Confidential information about a company that has not been made public and is used by someone to gain an advantage in the stock market.

Historical Price Patterns

The analysis of past price movements to forecast future price behavior in financial markets.

Market Efficiency

A market characteristic where prices fully reflect all available information, making it impossible to consistently achieve higher returns.

Arbitrage Opportunities

The chance to buy an asset at a low price in one market and sell it at a higher price in another, exploiting the price difference for profit.