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10 true or false a put option on Dr Pepper Snaple Group inc has an exercise...

10 true or false

a put option on Dr Pepper Snaple Group inc has an exercise price of $40. The current stock price is $41. The put option is in the money.

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Answer #1

A put option can be out of money, in the money or at the money. When strike price of the put is greater than market price of the underlying asset, the put option is known as in the money. A put option is out of money if the current price of underlying asset is above the strike price.

As the exercise or strike price of $ 40 of the stock is less than Market price of $ 41, the put option on Dr Pepper Snaple Group is out of the money. Hence the statement is false.

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