Questions 1. A call option is: A. the right to sell at a specific price. B. the right to buy at a specific price. C. an obligation to buy at a certain price. a 2. At expiration, the exercise value of a put optiod is: A. positive if the underlying asset price is less than the exercise price. B. zero only if the underlying asset price is equal to the exercise price. C. negative if the underlying asset price is greater than the exercise price. 3. At expiration, the exercise value of a call option is: A. the underlying asset price minus the exercise price. B. the greater of zero or the exercise price minus the underlying asset price. C. the greater of zero or the underlying asset price minus the exercise price. 4. An investor writes a put option with an exercise price of $40 when the stock price is $42. The option premium is $1. At expiration the stock price is $37. The investor will realize: A. a loss of $2. B. a loss of $3. C. a profit of $1 5. The price of an out-of-the-money option is: A. less than its time value. B. equal to its time value. C. greater than its time value. 6. A decrease in the risk-free rate of interest will: A. increase put and call option prices. B. decrease put option prices and increase all option prices. C. increase put option prices and decrease call option prices. 7. The put-call parity relationship for European options must hold because a protective put will have the same payoff as: A. a covered call B. a fiduciary call C. an uncovered call I 8. The put-call-forward parity relationship least likely includes: A. a risk-free bond. B. call and put options. C. the underlying asset. 9-A 1-year call option on the common stock of Cross Reef Inc., with an exercise price of $60 is trading for $8. The current stock price is $62. The risk-free rate is 4%. Calculate the price of the put option implied by put-call parity