Exhibit 13-9
USE THE FOLLOWING INFORMATION FOR THE NEXT QUESTION(S)
Consider the following information on put and call options for Bank of Montreal
$\begin{array}{ccc}
\text { Strike Price } & \text { Put Price } & \text { Call Price } \
\hline \$ 32.50 & \$ 2.85 & \$ 1.65
\end{array}$
-Refer to Exhibit 13-9. Calculate the net value of a protective put position at a stock price at expiration of $20, and a stock price at expiration of $45.
A) $6.35, $18.85
B) $29.65, $42.15
C) $21.65, $34.15
D) $8, $8
E) -$8, -$8

Question

Exhibit 13-9
USE THE FOLLOWING INFORMATION FOR THE NEXT QUESTION(S)
Consider the following information on put and call options for Bank of Montreal
 $\begin{array}{ccc}
\text { Strike Price } & \text { Put Price } & \text { Call Price } \
\hline \$ 32.50 & \$ 2.85 & \$ 1.65
\end{array}$
-Refer to Exhibit 13-9. Calculate the net value of a protective put position at a stock price at expiration of $20, and a stock price at expiration of $45.
A) $6.35, $18.85
B) $29.65, $42.15
C) $21.65, $34.15
D) $8, $8
E) -$8, -$8

Quizplus · Accepted Answer

A protective put involves buying the stock and buying a put option. At a stock price of $20, the put option allows selling the stock at the strike price of $32.50. After accounting for the cost of the put ($2.85), the net value is $29.65 ($32.50 - $2.85). At a stock price of $45, the put option is not exercised, so the net value is the stock price minus the cost of the put, which is $42.15 ($45 - $2.85).