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Finra Series-7 Exam - Topic 7 Question 16 Discussion

Actual exam question for Finra's Series-7 exam
Question #: 16
Topic #: 7
[All Series-7 Questions]

Bubba is long spot Canadian dollars at 0.7400. If he wants to buy one put option on Canadian dollars with a strike price of 74 and a cost of $0.35, what is Bubba's breakeven price for Canadian dollars?

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Suggested Answer: D

0.7435. The put protects against a decline in the exchange rate for Canadian dollars. However, the cost of the put raises the breakeven point to 0.7435 (0.7400 + 0.0035).


by Yuki at May 04, 2022, 07:05 AM

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Jules
4 months ago
Just did the math, 0.7365 is spot on!
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Brett
4 months ago
I thought it would be higher, interesting!
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Lamonica
4 months ago
Wait, how does that add up?
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Antonette
4 months ago
Totally agree, that makes sense!
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Terrilyn
4 months ago
Breakeven is 0.7365 after the option cost.
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Shannon
5 months ago
I think the answer might be 0.7365, but I’m second-guessing myself. I need to double-check how to calculate the breakeven with the option cost included.
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Dusti
5 months ago
I feel like the breakeven should be around the strike price, but I'm confused about how the cost of the option factors in.
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Lilli
5 months ago
I remember a similar question where we had to calculate breakeven with options, and I think it was just the strike price minus the premium. So maybe it's 0.7400 - 0.35?
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Aleisha
5 months ago
I think the breakeven price is the strike price minus the cost of the put option, but I'm not entirely sure how to apply that here.
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Alexis
5 months ago
I'm a little confused on this one. I know sexual harassment is a serious issue, but I'm not sure which specific principles in the code of ethics would apply. I'll have to review the options carefully and try to reason through it.
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Shanice
5 months ago
The Installation Wizard seems familiar too, but that might have been a different part of the process.
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Denny
5 months ago
I remember we practiced something about routing international numbers, but I'm unsure if it was specifically E.164.
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