CONNECT WITH LEARNSMART FOR BODIE: ESSE
CONNECT WITH LEARNSMART FOR BODIE: ESSE
11th Edition
ISBN: 2819440196239
Author: Bodie
Publisher: MCG
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Chapter 15, Problem 8PS

The following diagram shows the value of a put option at expiration:

Chapter 15, Problem 8PS, The following diagram shows the value of a put option at expiration: Ignoring transaction costs,
Ignoring transaction costs, which of the following statements about the value of the put option at expiration is true? LO 15 1
a. The expiration value of the short position in the put is $ 4 if the stock price is $ 76 .
b. The expiration value of the long position in the put is $ 4 if the stock price is $ 76 .
e. The long let has a positive expiration value when the stock price is below $ 8 0 .
d. The value of the short position in the put is zero for stock prices equaling or exceeding $ 76 .

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3. Suppose that a June put option to sell a share for $60 costs $4 and is held until June. (a) short position) make a profit? Under what circumstances will the seller of the option (i.e., the party with a (b) Under what circumstances will the option be exercised? (c) depends on the stock price at the maturity of the option. Draw a diagram showing how the profit from a short position in the option
Please choose on the options and please explain
Required: a-1. If the stock price at option expiration is $143, will you exercise your call? multiple choice 1 Yes No a-2. What is the net profit/loss on your position? (Input the amount as a positive value.)   a-3. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)   b-1. Would you exercise the call if you had bought the November call with the exercise price $130?multiple choice 2 Yes No b-2. What is the net profit/loss on your position? (Input the amount as a positive value.)   b-3. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)   c-1. What if you had bought the November put with exercise price $140 instead? Would you exercise the put at a stock price of $140?multiple choice 3 Yes No c-2. What is the rate of return on your position? (Negative value should be indicated by a minus…
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