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Corporate Finance · End Term · 13 Apr 2025 · January 2025 term

Question 24: A one-year call option with a strike price of Rs 20 is s…

Question 24

+3 marksOne correct option

A one-year call option with a strike price of Rs 20 is selling at a call premium of Rs 2. A one-year put option with a strike price of Rs 20 is selling at put premium of Rs 1. The current share price is Rs 22. One year later, the share price increases to Rs 25.

  1. A

    If you purchase one call option and one put option, then you make a profit of Rs 5.

  2. B

    If you purchase one call option and one put option, then you make a profit of Rs 4.

  3. C

    If you purchase one call option and one put option, then you make a profit of Rs 3.

  4. D

    If you purchase one call option and one put option, then you make a profit of Rs 2.

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Correct answer

  • D

    If you purchase one call option and one put option, then you make a profit of Rs 2.

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Question 24 of 35 in the IIT Madras BS Corporate Finance (Corporate Finance) End Term paper sat on 13 Apr 2025, in the January 2025 term (IIT M IMPROVEMENT AN EXAM QIM3 13 Apr 2025). It carries 3 marks.

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