Question 8 a) If Cherry Jones was to take a short position in an option which of the following would have the greater risk? (2 Marks) Not yet saved Answer: Marked out of 8.00 b) If Tom Jones wrote short put in ABC shares and the premium was 50c, the spot price was $10 and the exercise price was $8, the maximum profit that Max can earn is: (2 Marks) P Flag question Please answer as a decimal to 2 decimal places. Answer: (Note answer in dollars and cents) c) If Max Jones was to buy DEF Puts at a premium of $3 and the exercise price was $32.00 and the current spot price was $30, in the box below write down the following two numbers: (2 Marks). Answer to the nearest cent. with no S, or other symbols. Intrinsic Value Answer Time Value Answer: d) Describe the impact that the following actions would have on the value of a call option (2 Marks): Decrease in volatility of the underlying Security Increase in the time to maturity Increase in the spot price of the underlying Security Increase in the risk free rate Question 8 a) If Cherry Jones was to take a short position in an option which of the following would have the greater risk? (2 Marks) Not yet saved Answer: Marked out of 8.00 b) If Tom Jones wrote short put in ABC shares and the premium was 50c, the spot price was $10 and the exercise price was $8, the maximum profit that Max can earn is: (2 Marks) P Flag question Please answer as a decimal to 2 decimal places. Answer: (Note answer in dollars and cents) c) If Max Jones was to buy DEF Puts at a premium of $3 and the exercise price was $32.00 and the current spot price was $30, in the box below write down the following two numbers: (2 Marks). Answer to the nearest cent. with no S, or other symbols. Intrinsic Value Answer Time Value Answer: d) Describe the impact that the following actions would have on the value of a call option (2 Marks): Decrease in volatility of the underlying Security Increase in the time to maturity Increase in the spot price of the underlying Security Increase in the risk free rate