What Is the Payoff for a Put Option with a Strike

question 40

Multiple Choice

What is the payoff for a put option with a strike price of $22 if the price of the underlying stock at expiration is $19?

• A) $1
• B) $3
• C) $20
• D) $22

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Definitions:

Capital Gains

The profit from the sale of an asset or investment, where the sale price exceeds the purchase price.

Price Appreciation

An increase in the market value of an asset over time, often influenced by factors such as demand, inflation, and market conditions.

Risky Securities

Financial instruments that carry a high degree of investment risk due to the potential for significant fluctuations in value.

Riskless Securities

Financial instruments that are considered to have minimal risk of loss, typically issued by governments.