EF4320:
Homework03
1
Homework 3, Chapters 20 & 21
1.
The intrinsic value of an inthemoney put option is equal to
A.
the stock price minus the exercise price.
B.
the put premium.
C.
zero.
D.
the exercise price minus the stock price.
E.
none of the above.
2.
You purchase one IBM 70 call option for a premium of $6.
Ignoring transaction costs, the breakeven price of the position
is
3.
A covered call position is
4.
According to the putcall parity theorem, the value of a
European put option on a nondividend paying stock is equal
to:
A.
the call value plus the present value of the exercise price
plus the stock price.
B.
the call value plus the present value of the exercise price
minus the stock price.
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EF4320:
Homework03
2
C.
the present value of the stock price minus the exercise price
minus the call price.
D.
the present value of the stock price plus the exercise price
minus the call price.
E.
none of the above.
5.
A protective put strategy is
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 Spring '09
 WUXueping
 Options, HighFlyer Stock

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