At Contract Maturity the Value of a Put Option Is

question 58

Multiple Choice

At contract maturity the value of a put option is ________, where X equals the option's strike price and ST is the stock price at contract expiration.

• A) max (0, S_T − X)
• B) min (0, S_T − X)
• C) max (0, X − S_T)
• D) min (0, X − S_T)

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Definitions:

Discount Rate

The interest rate charged by central banks for loans to commercial banks or the rate used in discounted cash flow analysis to determine present value.

Issue Price

The price at which a new issue of securities (like stocks or bonds) is offered to the public by an issuer.

Decrease Rate

The rate at which a quantity is reduced over a specific period of time.

Weight Loss

The reduction of the total body mass, with an aim to improve fitness, health, and/or appearance.