If a Writer Sells a Put with a Strike Price

question 54

Multiple Choice

If a writer sells a put with a strike price of $70 at $3 per share, what is his profit or loss if the underlying stock at expiration is selling at $72?

• A) $4
• B) $3
• C) -$3
• D) -$4

---

Definitions:

Profit Margin Ratio

A financial metric used to evaluate a company's profitability by comparing net income to revenue.

Economic Conditions

The state of a country or region's economy, influenced by factors such as GDP, unemployment rates, and inflation.

Industry Average

A statistical measure that represents the average performance or output of companies within a particular sector or industry.

Adjusting Entries

Journal entries made at the end of an accounting period to update account balances before the preparation of financial statements, ensuring records adhere to the accrual basis of accounting.