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Question 34

1. Brian purchases 4 UTV May 35 Call @ 3 and 4 UTV May 35 Put @ 2. UTV falls to 19. What has Brian gained or lost?

   		He has lost $2,000.
   		He has gained $4,400.
   		He has lost $5,600.
   		He has gained $1,400.

1. Consider a binomial world in which the current stock price of 100 can either go up by 10 percent or down by 10 percent. The risk-free rate is 4 percent. Assume a two-period world. What is the theoretical value of the American put with an exercise price of 105?

   		5.49
   		3.08
   		5.00
   		4.33

Question 32

1. Laura Green purchases 5 XYZ Feb50 Puts @3. What is her maximum profit on the trade?

   		$1,500
   		Potentially unlimited
   		$25,000
   		$23,500