1.Which is correct regarding a

1.Which is correct regarding an American put option? a. It
cannot be worth less than S – X b. It cannot be worth more than S –
PV(X) c. It cannot be exercised until expiration day d. It is a
contract to sell the underlying stock at the strike price
2.

One year ago, you bought a put option with strike price $42 and
one year to expiration. Option premium was $10. Ignore the interest
rate. Today is the expiration day, and you still have an open long
position in the put. The underlying stock is trading at $30. Your
profit is

a.

0

b.

2

c.

12

d.

-12

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