Ch25 - Add, modify, and remove questions. Select a question...

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Unformatted text preview: Add, modify, and remove questions. Select a question type from the Add Question drop-down list and click Go to add questions. Use Creation Settings to establish which default options, such as feedback and images, are available for question creation. COURSES > FUNDAMENTALS OF CORPORATE FINANCE:, 9/E- ROSS > CONTROL PANEL > POOL MANAGER > POOL CANVAS Pool Canvas Add Multiple Choice Creation Settings Name Chapter 25 Option Valuation Description Questions which Blackboard's assessment component is incapable of supporting are not included in the export. Instructions Add Question Here Question 1 Multiple Choice Question Travis owns a stock that is currently valued at $45.80 a share. He is concerned that the stock price may decline so he just purchased a put option on the stock with an exercise price of $45. Which one of the following terms applies to the strategy Travis is using? Answer put-call parity covered call protective put straddle strangle Correct Feedback Refer to section 25.1 Incorrect Feedback Refer to section 25.1 Add Question Here Question 2 Multiple Choice Question Put-call parity is defined as the relationship between which of the following variables? I. risk-free asset II. underlying stock price III. call option IV. put option Answer I and II only II and III only II, III, and IV only I, II, and III only I, II, III, and IV Correct Feedback Refer to section 25.1 Incorrect Feedback Refer to section 25.1 Add Question Here Question 3 Multiple Choice Question Assume the price of Westward Co. stock increases by one percent. Which one of the following measures the effect that this change in the stock price will have on the value of the Westward Co. options? Answer theta vega rho delta gamma Correct Feedback Refer to section 25.3 Incorrect Feedback Refer to section 25.3 Add Question Here Question 4 Multiple Choice Question Which one of the following defines the relationship between the value of an option and the option's time to expiration? Answer theta. vega. rho. delta. gamma. Correct Feedback Refer to section 25.3 Incorrect Feedback Refer to section 25.3 Add Question Here Question 5 Multiple Choice Question Assume the standard deviation of the returns on ABC stock increases. The effect of this change on the value of the call options on ABC stock is measured by which one of the following? Answer theta. vega. rho. delta. gamma. Correct Feedback Refer to section 25.3 Incorrect Feedback Refer to section 25.3 Add Question Here Question 6 Multiple Choice Question The sensitivity of an option's value to a change in the risk-free rate is measured by which one of the following? Answer theta. vega. rho. delta. gamma. Correct Feedback Refer to section 25.3 Incorrect Feedback Refer to section 25.3 Add Question Here Question 7 Multiple Choice Question The implied volatility of the returns on the underlying asset that is computed using the Black-Scholes option pricing model is referred to as which one of the following?...
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This note was uploaded on 06/22/2010 for the course FIN 600 taught by Professor Marks during the Spring '10 term at Odessa College.

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Ch25 - Add, modify, and remove questions. Select a question...

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