Suppose You Have a Put Option That Allows You to Sell

question 169

Multiple Choice

Suppose you have a put option that allows you to sell 100 shares of Alcan for $54.50 per share any time before October 2013.If the stock price falls to $45.00 per share,your profit is

• A) $9.50
• B) $54.50
• C) $950.00
• D) $45.00
• E) $0.00

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Definitions:

Standardized

Establishing uniform standards or norms for a process, product, or system to ensure consistency and comparability across different instances.

Advertising

The profession or act of creating promotional content for commercial goods or services.

Standardized Product

Goods that are uniform in quality and specifications, enabling them to be interchangeable with similar products from other producers.

Perfect Competition

A market structure characterized by a large number of small firms, identical products, free entry and exit, and perfect information, leading to price takers.