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Corporate Finance · End Term · 22 Dec 2024 · September 2024 term · Set QDB1

Question 18: A trader invests in XYZ Inc. by buying 100 shares in Jun…

Question 18

+3 marksOne correct option

A trader invests in XYZ Inc. by buying 100 shares in June for Rs 50 per share. She also buys 100 European put options for Rs 5 each as insurance in case the stock drops sharply. The put options have a strike price of Rs 52 and a maturity date of December. What is the gain or loss if the spot price on the maturity date is Rs 55?

  1. A

    Rs 0, no gain, no loss

  2. B

    Rs 500 gain

  3. C

    Rs 500 loss

  4. D

    Rs 1000 gain

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Correct answer

  • A

    Rs 0, no gain, no loss

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Question 18 of 35 in the IIT Madras BS Corporate Finance (Corporate Finance) End Term paper sat on 22 Dec 2024, in the September 2024 term (IIT M DEGREE AN EXAM QDB3 22 Dec 2024). It carries 3 marks.

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