A Put Option on Swiss Franc Has a Strike (Exercise)

question 66

Multiple Choice

A put option on Swiss franc has a strike (exercise) price of $.92. The present exchange rate is $.89. This put option can be referred to as:

• A) in the money.
• B) out of the money.
• C) at the money.
• D) at a discount.

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Definitions:

Monopolistic Competition

A market structure featuring many firms selling products that are similar but not identical, allowing for competition based on quality, price, and marketing.

Chronic Excess Capacity

A persistent situation in which industries or firms have more production capacity available than is being used, often leading to economic inefficiencies and reduced profit margins.

Minimum-Cost Output

The quantity of output at which the average total cost is lowest—the bottom of the U-shaped average total cost curve.

Perfectly Competitive

refers to a market structure where there are many buyers and sellers, all selling identical products, with no single market participant being able to influence the market price.