Reference no: EM131041360
Question 1
There are two calls on the same stock. Both expire in 6 months and are identical in every way except the exercise price. If Call A has an exercise price of $40 and Call B has an exercise price of $50, which call will have a higher price?
|
A.
|
Call A
|
|
B.
|
Call B
|
|
C.
|
Cannot be determined
|
Question 2
If the present value of the exercise price is $20, the call option is selling for $5, and the market price of the stock is $22. If the put is selling for $5, should you buy it? Why or why not?
|
A.
|
Yes, you will make $2
|
|
B.
|
No, you will lose $3
|
|
C.
|
No, you will lose $2
|
|
D.
|
Yes, you will make $3
|
Question 3
Suppose you have written both a put and a call on the same stock with the same exercise price and the same expiration date (so you are short both options). You are best off if the stock price on the expiration date is
|
A.
|
Below the exercise price
|
|
B.
|
Equal to the exercise price
|
|
C.
|
Above the exercise price
|
Question 4
A decrease in ____ will decrease the price of both a call and a put on the same stock
|
A.
|
Stock price
|
|
B.
|
Exercise price
|
|
C.
|
Volatility
|
|
D.
|
Dividends
|
Question 5
Which of the following is an example of a real option?
|
A.
|
Foothold in an expanding market
|
|
B.
|
End a project early
|
|
C.
|
Wait for better market conditions
|
|
D.
|
All of these are real options
|
Question 6
You buy 27 call contracts with an exercise price of $80. The current price of the stock is $81. The ask price is $1.33 per contract. What is the cost of the option?
Question 7
The minimum option value
|
A.
|
speculative value
|
|
B.
|
intrinsic value
|
|
C.
|
option price
|
Question 8 Risk-neutral valuation is one way to estimate the value of the option before maturity
True
False
Question 9
If you are long the option, then you can choose whether to exercise or not.
True
False
Question 10
A put has an exercise price of $12 and 9 months to maturity. The stock price is $10. Find the intrinsic value. If the option price is $2.75, what is the speculative value?
|
A.
|
Intrinsic = 2; speculative = .75
|
|
B.
|
Intrinsic = 2; speculative = 2.75
|
|
C.
|
Intrinsic = 0; speculative = 2.75
|
|
D.
|
Intrinsic = 0; speculative = .75
|
|
Examine the standard solution for kim flowers stage one
: Examine the standard solution for Kim Flowers Stage 1. Convert your EER diagram into tables. Make sure that you follow the procedure described in power point slide attached.
|
|
Which one of the following items is a direct cost
: Printing costs incurred for payroll check processing; payroll check processing is the cost object.
|
|
Who has the responsibility for the financial statements
: Who has the responsibility for the financial statements? What is the role of the accountant (auditor) as to the financial statements?
|
|
Share price be on the ex-dividend date
: A company's management announces a $0.80 per share dividend payment. Assuming all investors are subject to a 16 percent tax rate on dividends, what will the share price be on the ex-dividend date?
|
|
Same exercise price and the same expiration date
: Suppose you have written both a put and a call on the same stock with the same exercise price and the same expiration date (so you are short both options). You are best off if the stock price on the expiration date is
|
|
Summarizes criminal event and uses the criminological theory
: Students must select at least one criminological theory and apply that theory to a current criminal event (within the past two months) reported in a local newspaper, television, or videos that are true stories. Students must write a short (5-6 pa..
|
|
Prepare journal entries to record the transactions for year
: Prepare T-accounts for inventories, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don't forget to enter the beginning balances in your inventory accounts). Compute an ending balan..
|
|
What is the current bond price
: Sqeekers Co. issued 14-year bonds a year ago at a coupon rate of 8.6 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6.9 percent, what is the current bond price?
|
|
What is the total amount owed to harry by natalie
: Now suppose that Natalie illustrates her writing with many large colorful pie charts and pictures and that about 20 percent of her total printing is primarily color. Mary uses no color illustrations. What is the total amount owed to Harry by Natal..
|