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ICMA Exam FMFQ Topic 3 Question 70 Discussion

Actual exam question for ICMA's FMFQ exam
Question #: 70
Topic #: 3
[All FMFQ 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?

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Suggested Answer: D

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

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Carey
1 months ago
Ah, the old put-selling gambit. Just be careful, amigo, or you might end up with a stock you don't want at a price you don't like. But hey, if you're feeling lucky, go for it!
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Roxane
1 months ago
I dunno, it seems like the market could always surprise you. I'm going with A - can't say for sure until we see what the stock does.
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Santos
11 days ago
User 3: I agree, it's hard to determine the maximum profit until the stock price changes.
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Edna
22 days ago
Yeah, you're right. The market can be unpredictable.
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Veronika
29 days ago
I think it's A) Cannot say - it depends on market movements.
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Carissa
1 months ago
This one's a cinch! The maximum profit is the premium you collected, which is EUR 2.80. Simple as that.
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Shoshana
2 months 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!
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Linette
1 months ago
Exactly, selling a put option can be a good way to generate income if you don't mind potentially buying the stock at the strike price.
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Wayne
1 months ago
So, even if the stock price drops below the strike price, your profit is still capped at EUR 2.80.
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William
1 months ago
Yes, that's correct. The maximum profit is the premium you received, which is EUR 2.80.
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Yasuko
1 months 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!
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Lauran
2 months ago
I'm not sure, but I think the maximum profit depends on market movements, so it could vary.
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Antonio
2 months ago
I agree with Brinda, the maximum profit is EUR 2.80 because that's the premium received.
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Sherita
2 months 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.
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Brinda
2 months ago
I think the maximum profit is EUR 2.80.
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Roxane
2 months 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.
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Glennis
1 months ago
D) EUR 2.80
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Rachael
1 months ago
C) EUR 43.20
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Cordelia
1 months ago
B) EUR 46.00
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Marquetta
1 months ago
A) Cannot say - it depends on market movements
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