Question :
1. What are the answers to 9a and be if on the day the option expires, the price of oil is $36.25 per barrel?
2. A firm owns a put option on 10,000 barrels of oil with a strike price of $37.50 per barrel.
a. Does the firm exercise the option if on the day the option expires the price of oil is $40 per barrel?
b. What is the cash flow on the day the option expires if the price of oil is $40 per barrel?