4.11 Stock X is selling for $40 a share. An American put option on this stock with a strike price of $48 is trading at $10 per share. a. the put is in the money b. the put is out of the money c. you can make arbitrage profit by buying the put and exercising it immediately d. a and c 4.12 Writer ofa call option has a positive payoff when the option is in the money, and writer of a put option has a negative payoff when the option is in the money. (True False) 4.13 One year ago, you wrote a put option with strike price $30 and one year to expiration. Option premium was $12. Ignore the interest rate. Today is the expiration day, and you still have an open short position in the put. The underlying stock is trading at $42. Your profit is a. Zero. You just broke even. b. $12 c. $42 d. $18 4.14 Convergence property implies that on the delivery day, 1. cost-of-carry is paid 2. gain 3. observed futures price equals observed spot price 4. hedgers make money on the long position equals loss on the short position A 1 1: CC O C1