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Which of the following statements is FALSE? A Putty-call parity is the relationship between the prices of American put and call options. B A real
Which of the following statements is FALSE? A Putty-call parity is the relationship between the prices of American put and call options. B A real option valuation will sometimes reveal that it is better to invest in a single large plant than a series of smaller plants. A call option is always riskier than the stock it is written on. D) The value of a stock is zero, if written on a stock whose price is zero. E) None of the above. Returning to Question 17 above, what is the present value of the loan amount in a replication strategy used in the hedge portfolio approach to receive the same total payoffs as in the question? (Hint: the option delta is: 0.88) A 48.33 B 58.33 68.33 None of the above. Which of the following is TRUE? A A plot of spot rates by maturity shows the term structure of interest rates. B The liquidity preference theory postulates that because market participants have preferences for short-term rather than long-term investments, liquidity premia are required to induce them to hold long-term assets. Therefore, long- term bonds usually have greater yields than short-term ones. Only governments issue bonds. D According to the market segmentation theory, because there are more of long-term investors on the market than short-term ones, long-term bonds are traded in greater volume, which is why they offer greater yield to the investors. E None of the above
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