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Shares of Beech Brewery Inc trade at $35 Call options with a strike price of $30 trade for $750 The options have 1 year until expiration

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

Feb 13 2020 View more View Less

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