Suppose a share is trading for $25 in the current period. You enter into a contract with another trader that once the last trading period ends you will sell 100 shares to this other trader for $18 per share. This implies that:
A) You will make a profit of $200 if the market price is $16 per share by the last trading period.
B) You will make a loss of $200 if the market price drops to $16 per share by the last trading period.
C) You will make a profit of $200 if the market price is $20 per share by the last trading period.
D) You will make a profit of $700 if the market price stays at $25 till the last trading period.

Question

Quizplus · Accepted Answer

If the market price is $16 per share by the last trading period, you can buy the shares at $16 and sell them for $18 as per the contract, making a profit of $2 per share. For 100 shares, this results in a profit of $200.

Suppose a Share Is Trading for $25 in the Current