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Shares of Beech Brewery, Inc. trade at $35. Call options with a strike price of $30 trade for $7.50. The options have 1 year until expiration and the risk free rate is 4%. According to put - call parity what should be the price of a $30 put option on Beech Brewery with one year to expiration.
a.$6.15
b.$6.36
c.$1.35
d.$11.15
62.Jim Lemke purchases a put option on Roofus Corp. for $3.50. The put option has a 1 year expiration and a strike price of $35. Currently Roofus Corp. is trading at $38. What is Lemke’s maximum loss on the put option?
a.$38
b.$35
c.$3.50
d.$31.50
63.Bill Henricksen, purchased a put option on Cycle Inc. for $4. The put option has a strike price of $40 and currently Cycle Inc. shares trade for $44. The expiration date of the option is 6 months from today. What is Henricksen’s maximum gain on his put option?
a.$4
b.$36
c.$40
d.$44
64.Which of the following option positions has a loss potential that is unlimited.
a.a long call
b.a naked short call
c.a short put
d.a long straddle
65.Drewfus Corp. is currently trading at $30. Call options with a strike price of $25 and 6 months to expiration are trading at $7 and call options with a strike price of $35 and 6 months to expiration are trading at $2. If Investor Andy Reutter buys a $25 call and simultaneously sells a $35 call what is his maximum gain on the position.
a.$10
b.unlimited
c.$3
d.$5
66.A call option on Dani Corp. is trading for $4.50. The strike price of the option is $25 and it has an expiration of 3 months. If the stock of Dani Corp. is trading at $28, how much of the option premium is attributed to intrinsic value?
a.$1.50
b.$3.00
c.$25
d.$28
67.Hannah Monstz is looking to purchase a call option on Thomas Co., which is currently trading at $35. The call option has a strike price of $32.50 and has 6 months to expiration. If the options has a premium of $5, what is Hannah’s maximum loss on the position?
a.$5
b.$2.50
c.$32.50
d.$35
68.Stanley Saeli is an investor who is bullish on LSL Corporation. Currently, LSL Corp. is trading at $51. To profit from his position, Saeli decides to sell put options on LSL Corp. that have a strike price of $45 and 1 year until expiration. The premium that he would receive on the option is $2.50. What is the most that Saeli can expect to gain per put option?
a.$6
b.$45
c.$2.50
d.$42.50
69.All of the following options are call options on Nixon Industries, which currently is trading at $35. They all have the same expiration date. Which of the following options should trade at the highest price.
a.A call option with a strike price of 20
b.A call option with a strike price of 30
c.A call option with a strike price of 40
d.A call option with a strike price of 50
70.All of the following options are put options with 9 months to expiration on Mac Industries. Which of the following options should trade at the lowest premium?
a.A put option with a strike price of 65
b.A put option with a strike price of 55
c.A put option with a strike price of 40
d.A put option with a strike price of 45
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