ICMA Exam FMFQ Topic 3 Question 70 Discussion

Actual exam question for ICMA's Financial Markets Foundation Qualification exam

Question #: 70
Topic #: 3

[All Financial Markets Foundation Qualification Questions]

You have sold a put on a stock at a strike of EUR 46 for a premium of EUR 2.80. What is your maximum profit on this deal?

ACannot say - it depends on market movements

BEUR 46.00

CEUR 43.20

DEUR 2.80

Show Suggested Answer

Suggested Answer: D

by Renay at Sep 15, 2024, 11:15 AM

Limited Time Offer

25%

Off

Get Premium FMFQ Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Carissa

5 days ago

This one's a cinch! The maximum profit is the premium you collected, which is EUR 2.80. Simple as that.

upvoted 0 times

...

Shoshana

10 days ago

Option D sounds right to me. The premium you received is your maximum profit, no matter what happens to the stock price. Easy money!

upvoted 0 times

...

Lauran

18 days ago

I'm not sure, but I think the maximum profit depends on market movements, so it could vary.

upvoted 0 times

...

Antonio

19 days ago

I agree with Brinda, the maximum profit is EUR 2.80 because that's the premium received.

upvoted 0 times

...

Sherita

21 days ago

Hmm, I think the correct answer is C. EUR 43.20. You sold the put at 46, and the premium was 2.80, so your max profit is the difference between those two, which is 43.20.

upvoted 0 times

...

Brinda

22 days ago

I think the maximum profit is EUR 2.80.

upvoted 0 times

...

Roxane

23 days ago

Well, if the stock price falls below 46 euros, I'd say the maximum profit is 2.80 euros. That's a pretty sweet deal, if you ask me.

upvoted 0 times

Cordelia

1 days ago

B) EUR 46.00

upvoted 0 times

...

Marquetta

3 days ago

A) Cannot say - it depends on market movements

upvoted 0 times

...