Finra Exam Series-7 Topic 7 Question 16 Discussion

Actual exam question for Finra's Series-7 exam

Question #: 16
Topic #: 7

Bubba is long spot Canadian dollars at 0.7400. If he wants to buy one put option on Canadian dollars with a strike price of 74 and a cost of $0.35, what is Bubba's breakeven price for Canadian dollars?

A0.4900

B0.7365

C0.7400

D0.7435

Show Suggested Answer

Suggested Answer: D

0.7435. The put protects against a decline in the exchange rate for Canadian dollars. However, the cost of the put raises the breakeven point to 0.7435 (0.7400 + 0.0035).

by Yuki at May 04, 2022, 07:05 AM

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