Determine the maximum payoff at expiry

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Questions -

Question 1 - Which one of the following statements accurately describes the value of a put option at expiry?

a) It is the maximum of the exercise price minus the share price and zero.

b) It is at least the exercise price.

c) It is at least the share price.

d) It is the maximum of the share price minus the exercise price and zero.

e) More than one of the above statements are correct.

Question 2 - A call option is purchased for $1.00 with an exercise price of $9.50. Determine the maximum payoff at expiry?

a) $5.00.

b) Zero.

c) $9.50.

d) $10.50.

e) None of the given options is correct.

Reference no: EM132984474

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