Suppose Your Portfolio Consists of One Share of Goldman Sachs

question 2

Multiple Choice

Suppose your portfolio consists of one share of Goldman Sachs (GS) and a European put option on GS with a strike of $105 and a maturity of a year. At maturity, the value of your portfolio must be

• A) Equal to or less than $105
• B) Equal to $105
• C) Equal to or greater than $105
• D) None of the above

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Definitions:

Goodwill

An intangible asset that arises when a company acquires another business for more than the fair value of its net identifiable assets.

Impairment

The condition where an asset's market value drops below its recorded cost, necessitating an adjustment to reflect the decreased value on financial statements.

Goodwill Impairment

A decrease in the value of a company's goodwill, indicating that the value of acquired assets has fallen below their original cost.

Income Tax Reassessment

The process by which tax authorities review and possibly adjust the amount of income tax payable by an individual or corporation following the submission of tax returns.