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Consider the Put option on the Canada 6s of 2038 which expires (matures) in July 2021. Suppose the put premium for one contract on the bond was $1,240 for a strike price of $102,643 in March 2021, and the call premium for the same strike price was $1,220. If the Canada 6s of 2038 bond sold for $102,470 in July 2021.

Part 6: The value of point N in Fig. B (the Put Option graph) is:

Part 7: The value of point K in Fig. B (the Put Option graph) is:

Part 8: At point L in Fig. B (Put Option), the Put buyer: (choose one option below)

Does not exercise the option and take a loss of $1240.

Exercise the option and takes a lesser loss than $1250.

Does not exercise the option and takes a lesser loss at $1240.

Exercise the option and make a lower profit than $1240.

Exercise the option and break even.

Part 9: At higher prices of the underlying than point N in the Put option (Fig. B): (choose one option below)

The put seller makes a profit of 1240.

The put is at the money and will not be exercised.

The buyer exercises the put for a profit of 1240 per contract.

The buyer and the seller receive an identical payoff of 1240 per contract.

The put is in the money and the buyer excessive for a profit of 1240.

Elg. A: Payoff from a Call Option Fig. B: Payoff from a Put Option Elg. A: Payoff from a Call Option Fig. B: Payoff from a Put Option

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