Homework Answers
Put option means right to sell a share at a particular date at a particular price. It gives holder a right to sell but not an obligation to sell.
Market price is greater than strike price, lapse option. which means option is out of money.
market price is less than strike price, exercise the option. Which means option is in the money.
Above statement is true.
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3. For a PUT option that is out of the money, is the strike /exercise price...
A put option on Euro has a strike (exercise) price of $0.56/€. This put option is...
A put option on Euro has a strike (exercise) price of $0.56/€. This put option is referred to as “Out of the money” if the exchange rate ___________. a. is below $0.56/€. b. is at $0.56/€. c. is above $0.56/€. d. None of the above.
If a call option with a strike price of $65.00 is in the money then: Select...
If a call option with a strike price of $65.00 is in the money then: Select one: a. a put option with the same strike price is also in the money. b. the intrinsic value of the call is negative. c. the intrinsic value of a put option with the same strike price is negative. d. a put option with a strike price of $60.00 is out of the money.
A: Long one in-the-money call option with strike (current stock price −$3) and one out-of-the money...
A: Long one in-the-money call option with strike (current stock price −$3) and one out-of-the money call option with strike (current stock price +$3) B: Long two at-the-money call options. All options are on the same asset and have the same maturity. Which one is better?
A put option and a call option on a stock have the same expiration date and the same exercise (or strike price). Both options expire in 6 months. Assume that put-call parity holds and interest rate is...
A put option and a call option on a stock have the same expiration date and the same exercise (or strike price). Both options expire in 6 months. Assume that put-call parity holds and interest rate is positive. If both call and put options have the same price, which of the following is true? A) Put option is in-the-money. B) Call option is in-the-money. C) Both call and put options are in-the-money. D) Both call and put options are out-of-the-money.
A certain Call option and Put option for Walker Industries stock both have an exercise (strike)...
A certain Call option and Put option for Walker Industries stock both have an exercise (strike) price of $35.00. The Call premium (price) is $3.21 and the Put premium (price) is $5.32. Assume the stock pays NO dividends, and that the risk-free rate is 4%. Both options expire in 41 days. 1. Using the put/call parity model, calculate the current stock price (S). (Show all work. Highlight in bold your answer.) [4 pts.] 2. Based upon your answer above for...
A European call option and put option on a stock both have a strike price of...
A European call option and put option on a stock both have a strike price of $45 and an expiration date in six months. Both sell for $2. The risk-free interest rate is 5% p.a. The current stock price is $43. There is no dividend expected for the next six months. a) If the stock price in three months is $48, which option is in the money and which one is out of the money? b) As an arbitrageur, can...
The current market price of a share of a stock is $80. If a put option...
The current market price of a share of a stock is $80. If a put option on this stock has a strike price of $75, the put Group of answer choices: a)sells for a lower price than if the market price of the stock is $75. b)is in the money. c)is in the money and sells for a lower price than if the market price of the stock is $75. d)is out of the money and sells for a lower...
Consider a put option and a call option with the same strike price and time to...
Consider a put option and a call option with the same strike price and time to maturity. Which of the following is TRUE? It is possible for both options to be in the money. One of the options must be either in the money or at the money. One of the options must be in the money. It is possible for both options to be out of the money.
The current price of a stock is $75. A put option with a strike price of...
The current price of a stock is $75. A put option with a strike price of $70 is purchased along with the stock. If the breakeven point for this hedge is at a stock price of $82, then the value of the put option at the time of purchase was (a) $5 (b) $7 (c) $12 (d) $14 (e) None of the above
The current price of a stock is $75. A put option with a strike price of...
The current price of a stock is $75. A put option with a strike price of $70 is purchased along with the stock. If the breakeven point for this hedge is at a stock price of $82, then the value of the put option at the time of purchase was (a) $5 (b) $7 (c) $12 (d) $14 (e) None of the above FIN
The current price of a stock is $75. A put option with a strike price of $70 is purchased along with the stock. If the breakeven point for this hedge is at a stock price of $82, then the value of the put option at the time of purchase was (a) $5 (b) $7 (c) $12 (d) $14 (e) None of the above
The current price of a stock is $75. A put option with a strike price of $70 is purchased along with the stock. If the breakeven point for this hedge is at a stock price of $82, then the value of the put option at the time of purchase was (a) $5 (b) $7 (c) $12 (d) $14 (e) None of the above FIN
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