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Homework answers / question archive / Suppose you believe that ABC Inc

Suppose you believe that ABC Inc

Finance

Suppose you believe that ABC Inc.'s stock price is going to decline sometime during the next 6 months. For $500 you could buy a 6-month put option giving you the right to sell 100 shares at a price of $50.00 per share. If you bought a 100-share contract for $500 and ABC Inc.'s stock price actually dropped to $40.00, you would make (net payoff).

a.$2,000

b.$1,500

c.$1,000

d.$500

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