// Numbas version: exam_results_page_options
{"name": "Put option - value", "extensions": [], "custom_part_types": [], "resources": [], "navigation": {"allowregen": true, "showfrontpage": false, "preventleave": false, "typeendtoleave": false}, "question_groups": [{"pickingStrategy": "all-ordered", "questions": [{"name": "Put option - value", "ungrouped_variables": ["premium", "exercise", "share", "tempvalue", "value", "bpremium", "bexercise", "bshare", "btempvalue", "bvalue", "bdiff"], "statement": "<p>If you are unsure of how to do&nbsp;a question, click on&nbsp;<em>Reveal answers</em>&nbsp;to see the full working. Then, once you understand how to do the question, click on&nbsp;<em>Try another question like this one</em>&nbsp;to start again. Do each question repeatedly to ensure you have mastered it.</p>", "metadata": {"licence": "Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International", "description": "Financial maths. Determine the break even price of a call option. And whether to use the option or not given a market price."}, "advice": "<p>a)</p>\n<p>You have already bought the put option which cost $\\var{premium}$ (the premium), which&nbsp;gives you the right, but not the obligation, to sell shares at the exercise price of $\\$\\var{exercise}$. The shares are currently selling at $\\$\\var{share}$ in the market.</p>\n<p></p>\n<p>The value of the put option will be what you can get using the option minus what the share is&nbsp;worth minus what you have already paid.</p>\n<p>In our situation, we have</p>\n<p>$\\begin{align}\\text{value}&amp;=\\var{exercise}-\\var{share}-\\var{premium}\\\\&amp;=\\var{tempvalue}\\end{align}$&nbsp;</p>\n<p><span data-jme-visible=\"tempvalue&lt;0\">Since this is a negative number, exercising the option would not be an advantage,&nbsp;you would not use it, the option is worthless in this situation.</span></p>\n<p>Therefore, the put option is worth $\\$\\var{value}$</p>\n<p></p>\n<p>b)</p>\n<p>You have already bought the put option which cost $\\var{bpremium}$ (the premium), which&nbsp;gives you the right, but not the obligation, to sell shares at the exercise price of $\\$\\var{bexercise}$. The shares are currently selling at $\\$\\var{bshare}$ in the market.</p>\n<p></p>\n<p>The value of the put option will be what you can get using the option minus what the share is&nbsp;worth minus what you have already paid.</p>\n<p>In our situation, we have</p>\n<p>$\\begin{align}\\text{value}&amp;=\\var{bexercise}-\\var{bshare}-\\var{bpremium}\\\\&amp;=\\var{btempvalue}\\end{align}$&nbsp;</p>\n<p><span data-jme-visible=\"btempvalue&lt;0\">Since this is a negative number, exercising the option would not be an advantage,&nbsp;you would not use it, the option is worthless in this situation.</span></p>\n<p>Therefore, the put option is worth $\\$\\var{bvalue}$</p>\n<p></p>", "variablesTest": {"condition": "", "maxRuns": 100}, "rulesets": {}, "preamble": {"js": "", "css": ""}, "extensions": [], "tags": [], "variables": {"exercise": {"templateType": "anything", "name": "exercise", "definition": "random(premium*7..premium*25)", "group": "Ungrouped variables", "description": ""}, "bshare": {"templateType": "anything", "name": "bshare", "definition": "if(value>0,random(bdiff..ceil(1.5*bdiff)#0.11 except bdiff),random(floor(0.7*bdiff)..bdiff#0.11 except bdiff))", "group": "Ungrouped variables", "description": "<p>bshare</p>"}, "tempvalue": {"templateType": "anything", "name": "tempvalue", "definition": "exercise-premium-share", "group": "Ungrouped variables", "description": ""}, "bexercise": {"templateType": "anything", "name": "bexercise", "definition": "random(premium*7..premium*25)", "group": "Ungrouped variables", "description": ""}, "bpremium": {"templateType": "anything", "name": "bpremium", "definition": "random(0.5..3#0.01)", "group": "Ungrouped variables", "description": ""}, "bdiff": {"templateType": "anything", "name": "bdiff", "definition": "bexercise-bpremium", "group": "Ungrouped variables", "description": ""}, "premium": {"templateType": "anything", "name": "premium", "definition": "random(0.5..3#0.01)", "group": "Ungrouped variables", "description": ""}, "value": {"templateType": "anything", "name": "value", "definition": "max(0,tempvalue)", "group": "Ungrouped variables", "description": ""}, "btempvalue": {"templateType": "anything", "name": "btempvalue", "definition": "bexercise-bpremium-bshare", "group": "Ungrouped variables", "description": ""}, "share": {"templateType": "anything", "name": "share", "definition": "random(floor(0.7*exercise)..ceil(1.3*exercise)#0.11 except exercise)", "group": "Ungrouped variables", "description": ""}, "bvalue": {"templateType": "anything", "name": "bvalue", "definition": "max(0,btempvalue)", "group": "Ungrouped variables", "description": ""}}, "functions": {}, "variable_groups": [], "parts": [{"unitTests": [], "gaps": [{"allowFractions": false, "unitTests": [], "scripts": {}, "useCustomName": false, "variableReplacements": [], "minValue": "value", "type": "numberentry", "extendBaseMarkingAlgorithm": true, "showFeedbackIcon": true, "showFractionHint": true, "customName": "", "notationStyles": ["plain", "en", "si-en"], "correctAnswerStyle": "plain", "maxValue": "value", "mustBeReducedPC": 0, "mustBeReduced": false, "customMarkingAlgorithm": "", "variableReplacementStrategy": "originalfirst", "correctAnswerFraction": false, "marks": 1, "showCorrectAnswer": true}], "useCustomName": false, "variableReplacements": [], "showCorrectAnswer": true, "type": "gapfill", "extendBaseMarkingAlgorithm": true, "showFeedbackIcon": true, "prompt": "<p>Suppose you have bought&nbsp;a put&nbsp;option with&nbsp;an exercise price of $\\$\\var{exercise}$ per share and a premium of $\\$\\var{premium}$ per share. If the current market price is $\\$\\var{share}$ per share, then what is the value of the put option?</p>\n<p>$\\$$&nbsp;[[0]]</p>\n<p>Note, if it is not an advantage to exercise the put option, then it is currently worthless.</p>", "scripts": {}, "customName": "", "customMarkingAlgorithm": "", "variableReplacementStrategy": "originalfirst", "sortAnswers": false, "marks": 0}, {"unitTests": [], "gaps": [{"allowFractions": false, "unitTests": [], "scripts": {}, "useCustomName": false, "variableReplacements": [], "minValue": "bvalue", "type": "numberentry", "extendBaseMarkingAlgorithm": true, "showFeedbackIcon": true, "showFractionHint": true, "customName": "", "notationStyles": ["plain", "en", "si-en"], "correctAnswerStyle": "plain", "maxValue": "bvalue", "mustBeReducedPC": 0, "mustBeReduced": false, "customMarkingAlgorithm": "", "variableReplacementStrategy": "originalfirst", "correctAnswerFraction": false, "marks": 1, "showCorrectAnswer": true}], "useCustomName": false, "variableReplacements": [], "showCorrectAnswer": true, "type": "gapfill", "extendBaseMarkingAlgorithm": true, "showFeedbackIcon": true, "prompt": "<p>Suppose you have bought&nbsp;a put&nbsp;option with&nbsp;an exercise price of $\\$\\var{bexercise}$ per share and a premium of $\\$\\var{bpremium}$ per share. If the current market price is $\\$\\var{bshare}$ per share, then what is the value of the put option?</p>\n<p>$\\$$&nbsp;[[0]]</p>\n<p>Note, if it is not an advantage to exercise the put option, then it is currently worthless.</p>", "scripts": {}, "customName": "", "customMarkingAlgorithm": "", "variableReplacementStrategy": "originalfirst", "sortAnswers": false, "marks": 0}], "contributors": [{"name": "Ben Brawn", "profile_url": "https://numbas.mathcentre.ac.uk/accounts/profile/605/"}]}]}], "contributors": [{"name": "Ben Brawn", "profile_url": "https://numbas.mathcentre.ac.uk/accounts/profile/605/"}]}