Essay
Stock purchased by an investor for $20 per share has now risen in price to $44 per share.To cover potential losses,the investor purchases a put option for a premium of $300 with an exercise price of $42 per share.The stock falls to $28 per share and the investor exercises the option and sells the shares at $42 per share.Ignoring brokerage commissions and taxes,what would be the investor's return from the stock?
(a)120 percent
(b)110 percent
(c)95 percent
(d)70 percent
Correct Answer:
Verified
Correct Answer:
Verified
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