theamandawhite
19.02.2020 •
Business
The price of a stock on February 1 is $84. A trader buys 200 put options on the stock with a strike price of $90 when the option price is $10. The options are exercised when the stock price is $85. The trader’s net profit or loss is:
A.Loss of $1,000
B.Loss of $2,000
C.Gain of $200
D.Gain of $1000
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Ответ:
The net loss of the trader amounts to $1,000, which means the correct option is A
Explanation:
The payoff is computed as:
Payoff = Strike price - Option's Stock price
where
Strike price is $90
Option's Stock Price is $85
Putting the values above:
Payoff = $90 - $85
= $5 per option
The trader bought 200 options, so the payoff would be:
Payoff = Options × Price per option
= 200 × $5
= $1,000
And the option cost would be:
Option cost = Options × Option Price
= 200 × $10
= $2,000
So, there computing net loss or gain as:
Net loss or gain = Payoff - Option cost
= $1,000 - $2,000
= $1,000 ( net loss)
Therefore, the correct option is A
Ответ:
D. $201000 increase
Explanation:
The computation of the change in accounts receivable is shown below:
= Sales on account - collected amount
= $709,000 - $508,000
= $201,000 increase
The cash sales does not affect the account receivable account and the written-off uncollectible amount is also not affected the account receivable account. Thus, we do not consider these both items in the computation part