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USE FOR QUESTION 1-3. On Tuesday Frank found a car that he is interested in purchasing and has negotiated a price of $24,000. Frank has
USE FOR QUESTION 1-3. On Tuesday Frank found a car that he is interested in purchasing and has negotiated a price of $24,000. Frank has to talk the decision over with his wife before he can make the purchase so Frank pays the dealer $100 to hold the car for one day. This deal is very similar to an option contract. 1. True or False: This deal MORE closely resembles a put option as opposed to a call option. 2. The strike price of this option is (choose the number that is the closest): a. $100 b. $0 c. $24,000 d. one day 3. The 'premium' for this option is: a. $100 b. $0 c. $24,000 d. one day
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