On the exercise date, Blue Corporation has a put option for 100 tons of copper at an exercise price of P290,000 per ton. If the current market price is P305,000 per ton, which of the following statements should Blue do? a.) Exercise the option to have additional earnings of 1,500,000 b.) Exercise the option to have savings of 15,000 per ton c.) Do not exercise the option and sell at the regular market price to earn incremental revenues of 1,500,000 d.) Do not exercise the option and buy at the regular market price to avoid incremental costs of 1,500,000
On the exercise date, Blue Corporation has a put option for 100 tons of copper at an exercise price of P290,000 per ton. If the current market price is P305,000 per ton, which of the following statements should Blue do? a.) Exercise the option to have additional earnings of 1,500,000 b.) Exercise the option to have savings of 15,000 per ton c.) Do not exercise the option and sell at the regular market price to earn incremental revenues of 1,500,000 d.) Do not exercise the option and buy at the regular market price to avoid incremental costs of 1,500,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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On the exercise date, Blue Corporation has a put option for 100 tons of copper at an exercise price of P290,000 per ton. If the current market price is P305,000 per ton, which of the following statements should Blue do?
a.) Exercise the option to have additional earnings of 1,500,000
b.) Exercise the option to have savings of 15,000 per ton
c.) Do not exercise the option and sell at the regular market price to earn incremental revenues of 1,500,000
d.) Do not exercise the option and buy at the regular market price to avoid incremental costs of 1,500,000
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