Question
Answer and explain the following: A. If you decrease a put option exercise price by $1, would the value of the option increase or decrease,
Answer and explain the following:
A. If you decrease a put option exercise price by $1, would the value of the option increase or decrease, and by more or less or the same as $1?
B. All else equal, will an option on a high beta stock be priced higher or lower than a low beta stock?
C. All else equal, will an option on a company with high firm-specific risk be priced higher or lower than a firm with low firm-specific risk?
D. All else equal, will an option with a higher exercise price have a higher or lower hedge ratio and an option with a low exercise price?
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