Which one of the following is true for an investor who purchased a share of stock for $45 and purchased a put option on the stock with an exercise price of $45?
A) The investor profits when the stock decreases in value.
B) The minimum payoff on the position is $45.
C) The investor is protected against upside potential.
D) Increases in the value of the stock will go to the seller of the put.

Question

Quizplus · Accepted Answer

The Answer of Which one of the following is true for an investor who purchased a share of stock for $45 and purchased a put option on the stock with an exercise price of $45?
A) The investor profits when the stock decreases in value.
B) The minimum payoff on the position is $45.
C) The investor is protected against upside potential.
D) Increases in the value of the stock will go to the seller of the put.

Which One of the Following Is True for an Investor