Question
Assume that you have just sold a stock for a loss at a price of $75, for tax purposes. You still wish to maintain exposure
Assume that you have just sold a stock for a loss at a price of $75, for tax purposes. You still wish to maintain exposure to the sold stock. Suppose that you sell a put with a strike price of $80 and a price of $8.25. Calculate the effective price paid to repurchase the stock if the price after 35 days is $85.
| A. | $77.75 | |
| B. | $87.25 | |
| C. | -$82.25 | |
| D. | $72.75 | |
| E. | $76.75 |
Step by Step Solution
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Step: 1
Since the stock is above strike price hence put shall expire worthless Payoff on sold p...
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
12th edition
978-0324597714, 324597711, 324597703, 978-8131518571, 8131518574, 978-0324597707
