A put option gives the owner the right to an asset at a, Financial Management

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A put option gives the owner the right to an asset at a

1. A put option gives the owner the right to ________ an asset at a fixed price at some future date.

A. buy

B. sell

C. hold

D. none of the above

2. Suppose that a stock sells at a price of $60 on the expiration date. Compute the payoff to the seller of a call option if the option strike price is $20.

A. -$20

B. -$30

C. -$40

D. -$50

3. Suppose you purchase a call option for $4 and a strike price of $30. On the expiration day, the price of the stock is $40. What is the return on the call option if you hold your position until maturity?

A. 170%

B. 150%

C. 125%

D. 130%

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