A put option on atlantis corp stock with an exercise price

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Reference no: EM132028940

1. You purchase one IBM July 120 call contract (equaling 100 shares) for a premium of $5. You hold the option until the expiration date, when IBM stock sells for $123 per share. You will realize a ______ on the investment.

$200 profit

$200 loss

$300 profit

$300 loss

2. The stock price of Atlantis Corp. is $43 today. The risk-free rate of return is 10%, and Atlantis Corp. pays no dividends. A call option on Atlantis Corp. stock with an exercise price of $40 and an expiration date 6 months from now is worth $5 today. A put option on Atlantis Corp. stock with an exercise price of $40 and an expiration date 6 months from now should be worth __________

$.05

$.14

$3.95

Reference no: EM132028940

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