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5.An investor has exchange-traded put options to sell 100 shares for $20. There is a $1 cash dividend. Which of the following is then the position of the investor?
A.The investor has put options to sell 100 shares for $20
B.The investor has put options to sell 100 shares for $19
C.The investor has put options to sell 105 shares for $19
D.The investor has put options to sell 105 shares for $19.05
A.The investor has put options to sell 100 shares for $20
B.The investor has put options to sell 100 shares for $19
C.The investor has put options to sell 105 shares for $19
D.The investor has put options to sell 105 shares for $19.05
Answer: A
Cash dividends unless they are unusually large have no effect on the terms of an option.
Cash dividends unless they are unusually large have no effect on the terms of an option.
Flashcard info:
Author: CoboCards-User
Main topic: Finance & Investment
Topic: Derivatives
Published: 27.10.2015