a) If Cherry Jones was to take a long position in an option which of the following would have the greater risk? (2 Marks)

Answer: AnswerCallPutCannot Say

b) If Tom Jones wrote a short call in ABC shares and the premium was 50c, the spot price was $10 and the exercise price was $8, the maximum profit that Tom can earn is: (2 Marks)

Please answer as a decimal to 2 decimal places.

Answer: Answer(Note answer in dollars and cents)

c) If Max Jones was to buy DEF Puts at a premium of $5 and the exercise price was $13 and the current spot price was $10, in the box below write down the following two numbers: (2 Marks). Note answer in dollars and cents. with no $, or other symbols.

Intrinsic Value	AnswerAnswer
Time Value	Answer: Answer

d) Describe the impact that the following actions would have on the value of a call option (2 Marks):

Increase in volatility of the underlying Security	AnswerIncreaseDecrease
Decrease in the time to maturity	AnswerIncreaseDecrease
Increase in the spot price of the underlying Security	AnswerIncreaseDecrease
Increase in the risk-free rate	AnswerIncreaseDecrease