Question
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) Sarah Kling bought a six-month Peppy Cola put option with an exercise price of $55 for a
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Sarah Kling bought a six-month Peppy Cola put option with an exercise price of $55 for a premium of $8.25 when Peppy was selling for $48.00 per share.
If at expiration Peppy is selling for $42.00, what is Sarah's dollar gain or loss?
|
| a. | $420 gain |
|
| b. | $420 loss |
|
| c. | $475 loss |
|
| d. | $475 gain |
|
| e. | $525 gain
|
What is Sarah's annualized gain/loss?
|
| a. | 11.51 percent gain |
|
| b. | 115.15 percent gain |
|
| c. | 11.51 percent loss |
|
| d. | 115.15 percent loss |
|
| e. | 0 percent |
If at expiration Peppy is selling for $47.00, what is Sarah's dollar gain or loss?
|
| a. | $25 loss |
|
| b. | $250 loss |
|
| c. | $25 gain |
|
| d. | $250 gain |
|
| e. | $0 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Cases In Healthcare Finance
Authors: Louis C. Gapenski
2nd Edition
1567932002, 978-1567932003
