Exhibit 13-5 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

Multiple Choice

Exhibit 13-5
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
Sarah Kling bought a 6-month Peppy Cola put option with an exercise price of $55 for a premium of $8.25 when Peppy was selling for $48.00 per share.
-Refer to Exhibit 13-5. If at expiration Peppy is selling for $42.00, what is Sarah's dollar gain or loss?

A) $420 gain
B) $420 loss
C) $475 loss
D) $475 gain
E) None of the above