The value of a call increases when I the time to expiration increases II the

The value of a call increases when i the time to

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29. The value of a call increases when:I. the time to expiration increases.II. the stock price increases.III. the risk-free rate of return increases.IV. the volatility of the price of the underlying stock increases. A. I and III onlyB. II, III, and IV onlyC. I, III, and IV onlyD. I, II, and III onlyE.I, II, III, and IV Difficulty level: Medium Topic: Factors Affecting Option Values 17-37
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Chapter 17 - Options and Corporate Finance 30. Which one of the following will cause the value of a call to decrease? Difficulty level: Medium Topic: Factors Affecting Option Values 31. Assume that you own both a May 40 put and a May 40 call on ABC stock. Which one of the following statements is correct concerning your option positions? Ignore taxes and transaction costs. Difficulty level: Medium Topic: Factors Affecting Option Values 32. You own both a May 20 call and a May 20 put. If the call finishes in the money, then the put will: Difficulty level: Medium Topic: Factors Affecting Option Values 17-38
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Chapter 17 - Options and Corporate Finance 33. You own stock in a firm that has a pure discount loan due in six months. The loan has a face value of $50,000. The assets of the firm are currently worth $62,000. The stockholders in this firm basically own a _____ option on the assets of the firm with a strike price of: A. put; $62,000.B.call; $50,000.C. warrant; $62,000.D. call; $62,000.E. put; $50,000. Difficulty level: Medium Topic: Equity As A Call Option 34. The buyer of a European call option has the: Difficulty level: Medium Topic: Call Option
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