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    Question

    Mr. X has purchased an index option with a strike price

    of ₹3000. What will be his net gain or loss if the price of the index at maturity is ₹2660 and the premium paid is ₹50?
    A 340 loss Correct Answer Incorrect Answer
    B 50 loss Correct Answer Incorrect Answer
    C 290 loss Correct Answer Incorrect Answer
    D 390 Loss Correct Answer Incorrect Answer
    E No Gain & Loss Correct Answer Incorrect Answer

    Solution

    Since the price of the index at maturity (₹2660) is lower than the strike price (₹3000), Mr. X would not exercise the option, as it would be unprofitable. Therefore, his loss is limited to the premium paid. Net Loss = Premium Paid = ₹50

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