Suppose a Financial Manager Buys Call Options on 45,000 Barrels

question 59

Multiple Choice

Suppose a financial manager buys call options on 45,000 barrels of oil with an exercise price of $31 per barrel.She simultaneously sells a put option on 45,000 barrels of oil with the same exercise price of $31 per barrel.Her net profit per barrel is _____ if the price per barrel is $29 and _____ if the price per barrel is $35.

• A)-$4; $2
• B)-$2; $0
• C)$0; -$2
• D)$0; $2
• E)-$2; $4

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Definitions:

Endoplasmic Reticulum

A network of membranous tubules within the cytoplasm of eukaryotic cells, involved in protein and lipid synthesis.

Rough

Characterized by an uneven or irregular surface; not smooth.

Smooth

Describes muscle tissue that is not striated, operates involuntarily, and is found in the walls of internal organs.

Golgi Apparatus

A cell organelle involved in the modification, sorting, and packaging of proteins and lipids for secretion or use within the cell.