Speculate on the price movement of underlying security

Assignment Help Financial Management

Reference no: EM131905625

1. The options market allows investors to speculate on the price movement of the underlying security. If the investor thought a security was going to go up in the future they would which of the following?

Buy a put option on the underlying security

Write a call option on the underlying security and pocket the profit

Sell a put option on the underlying security and pocket the profit

Buy a call option on the underlying security

2. Suppose you expect the value of a stock to increase over the next four months. Assuming you would like to take advantage of this price change, you would either __________ a call option or __________ a put option.

buy; buy

buy; write

write; buy

write; write

Reference no: EM131905625

Questions Cloud

What is the expected return of stock : If each economic state has the same probability of occurring, what is the expected return of the stock?

What role does company strategic plan : What role does a company's strategic plan play in the process of financial management?

Payback period to measure desirability of project ignores : Using the payback period to measure the desirability of a project ignores the:

What is price of the stock today if required rate of return : Suppose a company just paid a dividend of $1.51, What is the price of the stock today if the required rate of return is 11%?

Speculate on the price movement of underlying security : The options market allows investors to speculate on the price movement of the underlying security.

The internal rate of return decision rule states : The Internal Rate of Return decision rule states that a project should be accepted if its IRR:

Estimate of the current value of each share of sully stock : What is your estimate of the current value of each share of Sully’s stock?

Equity worth on per share basis : How much is Intangible Ltd.’s equity worth on a per share basis?

Investment community but entail certain risks and obligation : Financial Options are a useful tool in the investment community but entail certain risks and obligations.

User Account

All Pages