FIN358 Fixed Income and Derivative Securities

Take note: There is no passage given in the assignment.

Take note: No extra information was given. All the information are here.

Question 1:

An options investor made this remark: "The underlying stock of my call option has reached its highest price ever. It has appreciated over 100% in the last 6 months. I should exercise my call now. Unlike a stock, the call option has limited life. Should the stock price fall due to a technical correction, the 2 months left before the call expires is too short to see a rebound in the price. If I were to hold the stock instead, I would definitely not sell now."