Homework 3_ 2021SP-FIN-602-401_ Options and Futures - Canvas - CSU.pdf

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1/6 3/21/2021 Homework 3 Due Apr 5 at 11:59pm Points 10 Questions 10 Time Limit None Allowed Attempts 5 Attempt History Attempt Time Score LATEST Attempt 1 25 minutes 10 out of 10 Correct answers are hidden. Score for this attempt: 10 out of 10 Submitted Mar 21 at 3:11pm This attempt took 25 minutes. Take the Quiz Again 1 / 1 pts Question 1 The potential loss for a writer of a naked call option on a stock is increasing when the stock price is decreasing. equal to the call premium. unlimited. If the buyer of the option elects to exercise the option and buy the stock at the exercise price, the seller of the option must go into the open market and buy the stock (in order to sell the stock to the buyer of the contract) at the current market price. Theoretically, the market price of a stock is unlimited; thus the writer's potential loss is unlimited. None of the options are correct. limited.
3/21/2021 Homework 3: 2021SP-FIN-602-401: Options and Futures - Canvas - CSU 2/6 1 / 1 pts Question 2 Buyers of put options anticipate the value of the underlying asset will __________, and sellers of call options anticipate the value of the underlying asset will ________. increase; decrease increase; increase decrease; decrease The buyer of the put option hopes the price will fall in order to exercise the option and sell the stock at a price higher than the market price. Likewise, the

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