You Enter into an Exchange Option Contract Where You Have $- 30$

question 14

Multiple Choice

You enter into an exchange option contract where you have the right to give up 5 shares of IBM stock in exchange for one share of Google in three months. After three months, IBM is trading at $92 per share while Google is at $430. The payoff at maturity is

• A) \(- 30\) .
• B) Zero.
• C) \(+ 6\) .
• D) \(+ 30\) .

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Definitions:

Military Aid

Assistance given by one nation to another in the form of defense equipment, supplies, or training personnel to strengthen the recipient's military capability.

Financial Aid

Monetary support given to individuals or entities in need, often for education, healthcare, or in times of disaster.

Republicanism Ideology

A political ideology valuing the maintenance of a republic as a form of government, emphasizing liberty, civic virtue, and opposition to corruption and aristocracy.

Enlightenment Ideas

Philosophical and intellectual movements of the 17th and 18th centuries emphasizing reason, individualism, and skepticism towards traditional authorities, influencing many aspects of Western society including politics, science, and culture.