Question
A month ago, you bought shares of Zenon at $64 per share. Today you wrote a call contract on Zenon with a strike price of
A month ago, you bought shares of Zenon at $64 per share.
Today you wrote a call contract on Zenon with a strike price of $70. The price of the call is $5.14 per share.
Which of the following are correct? This is a multiple response question. Select all correct choices:
a.
The maximum you earn on this portfolio is $58.86 per share.
b.
The maximum you can earn on this portfolio is $11.14 per share.
c.
The maximum you can lose on this portfolio is $11.14 per share.
d.
You are betting the share price will fall by more than $5.14 in the near future.
e.
You are betting the share price will fall by less than $5.14 in the near future.
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Multinational Financial Management
Authors: R M Srivastava
1st Edition
8174466703, 9788174466709
