1. Which of the following statements are true and which are false? (a) The maximum gain from writing a call option is limited but the maximum loss is not. (b) For an option writer the risk of writing a call option is reduced if the writer has a short position in the underlying stock. (c) The writer of a call option will make a profit once the share price falls below the strike price. (d) Both parties to a put option contract will have to make margin payments. (e) A call premium for a strike price of 200 yen is 15 yen while and the share is currently priced at 190 yen. The time value for the call premium is greater than the intrinsic value. (f) The Black-Scholes model provides an estimate of the price of an American option on a dividend paying stock. (g) If implied volatility rises, all else equal, both call and put premiums will rise. (h) If on a newly issued option, the underlying share price is 100 yen and the strike price is 100 yen then time value of the option will be at its maximum