Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
10. The higher the amount of dividends a stock pays, the a the lower its dividend yield e the value of a call will increase
10. The higher the amount of dividends a stock pays, the a the lower its dividend yield e the value of a call will increase inmediately after the ex-dividend day d the lower the value of a call option I1. Buying and selling a call option on the same stock with the same strike price and expiration date is a a strip b. straddle c. spread d split 12. Ifan investor buys a call with a strike price of $90 nd the underlying stock at the time of expiration is S%, what is her profit or loss per share if she paid the writer $4 a share? a. $2 d-$2. 13. A(n)--will increase the market value of a put option. a interest rate change b increase in the dividend rate of the underlying stock c. decrease in the volatility of the underlying stock. d. decrease in the earnings rate of the underlying stock 14. A(n)--willincrease the market value of a call option. a decrease in the announced dividend amount. b decrease in the time to expiration. c. decrease in the volatility of the underlying stock d. increase in the interest rate. 15. An important assumption of put-call parity is that a both options may have different exercise prices but the same expiration dates. b. both options have the same exercise prices and the same expiration dates. c. both options will produce the same payoff on the stock as well as a risky bond d both options will produce the same payoff on the stock as well as another risky asset 16.-, buy and sell futures contracts to offset an otherwise risky position in the spot market. a. Speculators. b. Floor brokers. c. Market makers. d. Hedgers 17. Futures contracts are standardized in terms of as well as the type of asset that is permissible for delivery. a liability b. location c. delivery d. markets
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started