An investor owns a put option with a strike price of $ 20, the premium paid was $ 2. The stock price on the option expiration date is $ 25, which is the below statements is correct? A ) The loss on the option is$7 B The option should be allowed to lapse C The intrinsic value of the option is - $2 D The profit on the option is $ 3
An investor owns a put option with a strike price of $ 20, the premium paid was $ 2. The stock price on the option expiration date is $ 25, which is the below statements is correct? A ) The loss on the option is$7 B The option should be allowed to lapse C The intrinsic value of the option is - $2 D The profit on the option is $ 3
Fundamentals of Financial Management (MindTap Course List)
14th Edition
ISBN:9781285867977
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter18: Derivatives And Risk Management
Section18.A: Valuation Of Put Options
Problem 1P
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Question 13
An investor owns a put option with a strike price of $ 20, the premium paid was $ 2. The stock price on the option expiration date is $ 25, which is the below statements is correct?
A ) The loss on the option is$7
B The option should be allowed to lapse
C The intrinsic value of the option is - $2
D The profit on the option is $ 3
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