8- The higher the strike price, the a call, all else being equal. a) higher, higher...
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8- The higher the strike price, the a call, all else being equal. a) higher, higher b) lower; lower c) higher, lower d) lower, higher e) Doesn't move; higher the value of a put and the the value of 9-A 5-month European call option on a non-dividend-paying stock has a strike price of $30. The underlying stock is selling for $32 and the risk free rate is 6%. If the market value of the call is $3.5, is there any arbitrage opportunity and what's the profit in today's terms? a) Yes, $1.78 b) Yes, $0.76 c) No, $0 d) No, $3.5 e) Yes, $0 10-A European put option that expires in 6 months and has a strike price of $40, is selling for $3. A European call option that expires in 6 months, on the same underlying as the put option and has a strike price of $40, is selling for $1.5. The underlying stock is selling for $37, and a dividend of $0.75 is expected in 4 months and 8 months from now. The risk free rate is 6%. You believe that there's a mispricing in the value of the call. What should be the value of the call option, and how much net profit you will make at expiration? a) $0.447, $1.085 b) $0.447, $1.053 c) $0,50 d) $1.5, $0 e) Cannot be determined from the information given 8- The higher the strike price, the a call, all else being equal. a) higher, higher b) lower; lower c) higher, lower d) lower, higher e) Doesn't move; higher the value of a put and the the value of 9-A 5-month European call option on a non-dividend-paying stock has a strike price of $30. The underlying stock is selling for $32 and the risk free rate is 6%. If the market value of the call is $3.5, is there any arbitrage opportunity and what's the profit in today's terms? a) Yes, $1.78 b) Yes, $0.76 c) No, $0 d) No, $3.5 e) Yes, $0 10-A European put option that expires in 6 months and has a strike price of $40, is selling for $3. A European call option that expires in 6 months, on the same underlying as the put option and has a strike price of $40, is selling for $1.5. The underlying stock is selling for $37, and a dividend of $0.75 is expected in 4 months and 8 months from now. The risk free rate is 6%. You believe that there's a mispricing in the value of the call. What should be the value of the call option, and how much net profit you will make at expiration? a) $0.447, $1.085 b) $0.447, $1.053 c) $0,50 d) $1.5, $0 e) Cannot be determined from the information given
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The higher the strike price the lower value of a put and the higher the value of a call all else being equal So the correct option is d lower higher W... View the full answer
Related Book For
Fluid Mechanics Fundamentals And Applications
ISBN: 9780073380322
3rd Edition
Authors: Yunus Cengel, John Cimbala
Posted Date:
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