The Expiration Value of a Put Option Is _____

question 7

Multiple Choice

The expiration value of a put option is _____.(The future price at the expiration date,T,is denoted by S_T and the exercise price is denoted by K )

• A)min (0,S_T - K ).
• B)max (0,S_T - K ).
• C)min (0,K - S_T)
• D)max (0,K - S_T)

---

Definitions:

Fixed Cost

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Hourly Wages

The rate an employee is paid for each hour worked, often regulated by labor laws.

Guaranteed Contracts

Agreements that assure certainbenefits or compensations, often seen in professional sports and executive employment contracts, regardless of performance or circumstances.

Average Fixed Cost

The fixed expenses of a firm (costs that do not change with output level) divided by the quantity of output produced.