True or False:
1. If you are short a put option that is exercised, and you are
assigned, then you are required to sell the stock at the strike
price.
2. An American option can be exercised only at the expiration
date.
3. A call option gives the owner the right to purchase a fixed
number of shares at a specified price, but no right to receive
dividends paid during the life of the option.
4. A put option with...
1.An American call option on a stock ____________ (should or
should not) be exercised early when no dividends are expected.
2.The European put price plus the stock price must be __________
(lower, equal, or higher) the European call price plus the
__________ (present or future) value of the strike price.
3.A European put option is always worth _______________ (less
than, equal, or more than) the present value of the strike price. A
European call option is always worth ________________ (less...
It is well-known that an American call option written on
non-dividend paying stock shouldn’t be exercised early. Please
explain why an American futures call might ever be worth exercising
early, even if the underlying stock of the futures doesn’t pay any
dividend. (Hint: what is the risk neutral probability for pricing
future option, and what is the risk neutral probability for pricing
a stock option where the stock is dividend paying?)
The seller of an option will always __________ when the option
is exercised, so:
a
lose; the buyer of an option pays a premium to the seller of the
option as compensation for the risk of loss that the option seller
takes.
b
lose; the seller of an option will also have an option to get
out of the option contract.
c
profit; the cost of options is very low.
d
profit; the seller of the option will agree to...
True or False?
Short Call Option provides the option (not the obligation) to
sell the underlying asset for the strike price at maturity.”
Explain your answer with example(s).
True or False?
Long Put Option provides the option (not the obligation) to sell
the underlying asset for the strike price at maturity.”
Explain your answer with example(s).
1. Variables can only be numbers.
True or False
2. American Airlines reduced its round trip fare from Boston to
New York by $45. The sale price was $139. What was the original
price?
Original price:
3. Joy Lindman, who works for GE, receives an annual salary of
$85,000. Today she was informed by her boss that she will be
receiving a $3,000 raise. What percent of her old salary is the
$3,000 raise? (Round to nearest hundredth percent.)
Raise...
1. True or False: Confidence intervals can only be calculated
for means.
True
False
SAVE
2. Suppose a sample of 200 barrow-wights (wraith-like
creatures that feed on the life force of the living) yields a
sample mean of 6.2 living beings consumed per day. Assuming a
standard error of 1.7, what would the upper bound of a 95%
confidence interval be?
SAVE
3. Using the same ridiculous survey data from the previous
question, what would the lower bound of a...
True or False:
The UCC equivalent of a common law “option” is a “firm
offer.”
The “mirror image” rule for common law acceptances has been
adopted by the
UCC.
A firm offer under the UCC is irrevocable for up to six
months.
Unlike common law contracts, UCC contracts can be modified
without new or additional consideration being provided.
For sales contracts, the UCC rejects the common law parol
evidence
rule.
A UCC contract for the sale of goods with a...