Which of the statements about the volatility is not true

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1.Which of the following statements about the volatility is not true? a. the implied volatility often differs across options with different exercise prices b. the implied volatility equals the historical volatility if the option is correctly priced c. the implied volatility is determined by trial and error d. the implied volatility is nearly linearly related to the option price e. none of the above

2.Consider a stock priced at $30 with a standard deviation of 0.3. The risk-free rate is 0.05. There are put and call options available at exercise prices of 30 and a time to expiration of six months. The calls are priced at $2.89 and the puts cost $2.15. There are no dividends on the stock and the options are European. Assume that all transactions consist of 100 shares or one contract (100 options). Use this information to answer questions 7 and

3. What is your profit if you buy a call, hold it to expiration and the stock price at expiration is $37? a. $32.89 b. $30.00 c. $27.11 d. $32.15 e. there is no breakeven

The profit = $411

I believe the choices provided are incorrect

4. Consider a stock priced at $30 with a standard deviation of 0.3. The risk-free rate is 0.05. There are put and call options available at exercise prices of 30 and a time to expiration of six months. The calls are priced at $2.89 and the puts cost $2.15. There are no dividends on the stock and the options are European.

Reference no: EM13844165

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