1. Give me 4 types of derivatives. Which of them are suitable to buy if you don't...
Question:
1. Give me 4 types of derivatives. Which of them are suitable to buy if you don't have money today?
2. What does "selling a call" option require you to do? In your answer, give at least one argument of the risk.
3. Write out the expression for put-call parity in terms of the Bond price. Explain the characteristics of the bond: maturity, coupon and face value.
4. Does increased volatility help short calls? Does it help short puts? Explain your reasoning with at least 2 reasons.
5. What is the intrinsic value of an option? What is the time value of an option? Can calls and puts with the same strike both have intrinsic value?
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta