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A Strategy Consists of Buying a Market Index Product at $830

Question 3

Multiple Choice

A strategy consists of buying a market index product at $830 and longing a put on the index with a strike of $830.If the put premium is $18.00 and interest rates are 0.5% per month,what is the profit or loss at expiration (in 6 months) if the market index is $810?


A) $20.00 gain
B) $18.65 gain
C) $36.29 loss
D) $43.76 loss

Correct Answer:

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