Question 1

Investor A bought a call option and Investor B bought a put option.All else equal if the interest rate increases the value of Investor A's position will ______ and the value of Investor B's position will _______.

Accepted Answer

A)   increase; increase
B)   increase; decrease
C)   decrease; increase
D)   decrease; decreaseE) B) and C)
F) A) and C)

Question 2

The __________ is the stock price minus exercise price,or the profit that could be attained by immediate exercise of an in-the-money call option.

Accepted Answer

A)   intrinsic value
B)   time value
C)   stated value
D)   discounted valueE) A) and D)
F) None of the above

Question 3

A higher dividend payout policy will have a __________ impact on the value of a put and a __________ impact on the value of a call.

Accepted Answer

A)   negative; negative
B)   negative; positive
C)   positive; negative
D)   positive; positiveE) C) and D)
F) A) and C)

Question 4

The price of a stock put option is __________ correlated with the stock price and __________ correlated with the exercise price.

Accepted Answer

A)   negatively; negatively
B)   negatively; positively
C)   positively; negatively
D)   positively; positivelyE) B) and C)
F) A) and D)

Question 5

A one dollar increase in a stock's price would result in __________ in the call option's value of __________ than one dollar.

Accepted Answer

A)   a decrease; less
B)   a decrease; more
C)   an increase; less
D)   an increase; moreE) All of the above
F) A) and B)

Exam 16: Option Valuation

A one dollar increase in a stock's price would result in in the call option's value of than one dollar.

Correct Answer
verified

A higher dividend payout policy will have a impact on the value of a put and a impact on the value of a call.

Correct Answer
verified

The __________ is the stock price minus exercise price,or the profit that could be attained by immediate exercise of an in-the-money call option.

Correct Answer
verified

The price of a stock put option is correlated with the stock price and correlated with the exercise price.

Correct Answer
verified

Investor A bought a call option and Investor B bought a put option.All else equal if the interest rate increases the value of Investor A's position will and the value of Investor B's position will _.

Correct Answer
verified

Exam 16: Option Valuation

A one dollar increase in a stock's price would result in __________ in the call option's value of __________ than one dollar.

Correct AnswerverifiedShow Answer

A higher dividend payout policy will have a __________ impact on the value of a put and a __________ impact on the value of a call.

Correct AnswerverifiedShow Answer

The __________ is the stock price minus exercise price,or the profit that could be attained by immediate exercise of an in-the-money call option.

Correct AnswerverifiedShow Answer

The price of a stock put option is __________ correlated with the stock price and __________ correlated with the exercise price.

Correct AnswerverifiedShow Answer

Investor A bought a call option and Investor B bought a put option.All else equal if the interest rate increases the value of Investor A's position will ______ and the value of Investor B's position will _______.

Correct AnswerverifiedShow Answer

A one dollar increase in a stock's price would result in in the call option's value of than one dollar.

Correct Answer
verified

A higher dividend payout policy will have a impact on the value of a put and a impact on the value of a call.

Correct Answer
verified

Correct Answer
verified

The price of a stock put option is correlated with the stock price and correlated with the exercise price.

Correct Answer
verified

Investor A bought a call option and Investor B bought a put option.All else equal if the interest rate increases the value of Investor A's position will and the value of Investor B's position will _.

Correct Answer
verified