multiple-choice Assume that IBM is trading for $100 a share and you purchase a p

Question

multiple-choice

Assume that IBM is trading for $100 a share and you purchase a put option with a strike price of $95 a share. Also assume that the price of the option equals $500.

A:

You would profit by exercising the option if IBM's share price increases to $103 a share.

B:

You would profit by exercising the option if IBM's share price decreases to $97 a share.

C:

You would profit by exercising the option if IBM's share price decreases to $88 a share.

D:

Both answers b) and c) are correct.

A:

You would profit by exercising the option if IBM's share price increases to $103 a share.

B:

You would profit by exercising the option if IBM's share price decreases to $97 a share.

C:

You would profit by exercising the option if IBM's share price decreases to $88 a share.

D:

Both answers b) and c) are correct.

Explanation / Answer

You would profit by exercising the option if IBM's share price decreases to $88 a share.

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.