S=48 X=50 C=4 P=3

2. A straddle requires purchasing one call and one put on the same asset with the same strike price. For this data the payoff for a straddle is_____________.

a. $2 Answer

b. -$1

c. -$5

d. -$7

e. $0

3. If an investor originally bought the underlying asset for $50, the loss would be $2. If a put option was also purchased, the loss will be______.

a. -$2

b. -$3

c. $0

d. -$1

e. -$5