Question 1 What is the difference between an American and European Option Question 2 If I take a short position on a call and the price of the associated FALLS what happens to my investment Question 3 What are the three growth stages of a firm Bonus Extra Credit Question 4 Name one reason why I would purchase options OTHER THAN financial return EXERCISE You were just about to invest in a toy factory then your friend told you that you could make more money investing in options than you could purchasing stocks Question 5 Before doing the math please provide one reason for and one reason against this argument Rather than buying the stock of company A you decide to purchase the options instead you consider four options plays based on the following assumption Factory A offers $5 00 a share Dividends are expected to grow at 6 per year and the current dividend is $1 per share The expected rate of return is 20 What should the current stock price be Question 6 What type of option would I purchase to trade of the above assumption (Call v Put Short v Long) Question 7 Should you purchase a American or European Option Bonus Extra Credit Question 8 If you were 100 Factory A's stock would achieve a 20 return what is the most aggressive strike price you would purchase

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Question 1: What is the difference between an American and European Option?

Question 2: If I take a short position on a call and the price of the associated FALLS what happens to my investment.

Question 3: What are the three growth stages of a firm?

Bonus/Extra Credit Question 4: Name one reason why I would purchase options OTHER THAN financial return

EXERCISE: You were just about to invest in a toy factory then your friend told you that you could make more money investing in options than you could purchasing stocks.

Question 5: Before doing the math please provide one reason for and one reason against this argument

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Rather than buying the stock of company A you decide to purchase the options instead you consider four options plays based on the following assumption:
"Factory A offers $5.00 a share. Dividends are expected to grow at 6% per year and the current dividend is $1 per share. The expected rate of return is 20%. What should the current stock price be?"

Question 6: What type of option would I purchase to trade of the above assumption? (Call v Put & Short v. Long)

Question 7: Should you purchase a American or European Option?

Bonus/Extra Credit Question 8: If you were 100% Factory A's stock would achieve a 20% return what is the most aggressive strike price you would purchase?