Based on the Option Quote, the June Put Should Cost

question 37

Multiple Choice

Based on the option quote, the June put should cost
I. more than $477
II. more than $665
III. more than the Mar and Jun 60 calls
IV. more than the Mar 60 call but no more than the Jun 60 call

• A) I only
• B) I, II, and IV only
• C) I, II, and III only
• D) I and III only
• E) IV only The June put price must be greater than the intrinsic value of ($50-$45.23) * 100 and must be worth more than the Mar put price and both the March and Jun 60 calls.

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Definitions:

Inventory

The complete inventory of products and materials a company possesses, meant for sale or to be used in manufacturing.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including material and labor costs.

Accounts Receivable

Funds that customers owe to a business for products or services provided but for which payment has not yet been received.

Unearned Sales Revenues

A liability on a company's balance sheet that represents revenue received before the company has delivered goods or services.