Question

1. Does market price of a put option decrease or increase in the exercise price? 2....

1. Does market price of a put option decrease or increase in the exercise price?

2. Does market price of a put option decrease or increase in the time to expiration?

3. Does market price of a put option decrease or increase in the price of underlying asset?  

4. Does market price of a put option decrease or increase in the dividend payouts of underlying asset?

5. Does market price of a put option decrease or increase in the interest rate?

6. Does market price of a put option decrease or increase in the volatility of the underlying asset?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Assuming all variables given are increasing

Ans 1) Price of put will increase

Ans 2) Price of put will increase

Ans 3) Price of put will decrease

Ans 4) Put price will increase

Ans 5) Put price will decrease

Ans 6) Price of put will increase

Assuming all variables given are decreasing

Ans 1) Price of put will decrease

Ans 2) Price of put will decrease

Ans 3) Price of put will increase

Ans 4) Put price will decrease

Ans 5) Put price will increase

Ans 6) Price of put will decrease

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. American put option price increase if time to expiration gets extended. True or False 2....
1. American put option price increase if time to expiration gets extended. True or False 2. American put option price will increase if risk free rate decrease. True or False 3. American put option price increase if volatility of underlying stock price goes down. True or False 4. For a non dividend paying underlying stocks, american call options can be more expensive than european call options that are equal in other terms. True or False
1. You buy a put option with strike price of $25. Currently, the market value of...
1. You buy a put option with strike price of $25. Currently, the market value of the underlying asset is $30. The put option premium is $3.25. Assume that the contract is for 150 units of the underlying asset. Assume the interest rate is 0%. a. What is the intrinsic value of the put option? b. What is the time value of the put option? c. What is your net cash flow if the market value of the options’ underlying...
1:Consider a European call option on a stock with current price $100 and volatility 25%. The...
1:Consider a European call option on a stock with current price $100 and volatility 25%. The stock pays a $1 dividend in 1 month. Assume that the strike price is $100 and the time to expiration is 3 months. The risk free rate is 5%. Calculate the price of the the call option. 2: Consider a European call option with strike price 100, time to expiration of 3 months. Assume the risk free rate is 5% compounded continuously. If the...
Please find the price of the put option using the simulated stock prices. The put option...
Please find the price of the put option using the simulated stock prices. The put option matures in 1 year and has exercise price $30. The price of the underlying stock is $30 today. The average annual stock return is 5%. The annualized stock volatility is 15%. The interest rate on the risk-free asset is 5% per year. Please simulate the end of year stock price for 1000 times.
You are attempting to value a put option with an exercise price of $102 and one...
You are attempting to value a put option with an exercise price of $102 and one year to expiration. The underlying stock pays no dividends, its current price is $102, and you believe it has a 50% chance of increasing to $121 and a 50% chance of decreasing to $83. The risk-free rate of interest is 10%. Calculate the value of a put option with exercise price $102.
A European put option has an exercise price of £100. It has one year to expiration....
A European put option has an exercise price of £100. It has one year to expiration. The underlying stock does not pay any dividends and has a current price of £90. This price has a 50% chance of increasing to £110 and a 50% chance of decreasing to £70. The risk free rate of interest is 1% p.a. Calculate the price of the put option using the two state stock price model applying the replicating portfolio method.
3.3 In the Black-Scholes option-pricing model, if volatility increases, the value of a call option will...
3.3 In the Black-Scholes option-pricing model, if volatility increases, the value of a call option will increase but the value of the put option will decrease. (True / False) 3.4 The Black-Scholes option pricing model assumes which of the following? Jumps in the underlying price Constant volatility of the underlying Possibility of negative underlying price Interest rate increasing as option nears expiration
You are attempting to value a put option with an exercise price of $108 and one...
You are attempting to value a put option with an exercise price of $108 and one year to expiration. The underlying stock pays no dividends, its current price is $108, and you believe it has a 50% chance of increasing to $122 and a 50% chance of decreasing to $94. The risk-free rate of interest is 11%. Calculate the value of a put option with exercise price $108. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
You are attempting to value a put option with an exercise price of $108 and one...
You are attempting to value a put option with an exercise price of $108 and one year to expiration. The underlying stock pays no dividends, its current price is $108, and you believe it has a 50% chance of increasing to $122 and a 50% chance of decreasing to $94. The risk-free rate of interest is 11%. Calculate the value of a put option with exercise price $108. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
You are to calculate a put option (European) that has 3 months left to expiration. The...
You are to calculate a put option (European) that has 3 months left to expiration. The underlying stock does NOT pay dividends and both the stock price and exercise price happen to be equal at $50. If the risk free rate is currently 10% per annum, and the volatility is assessed at 30% per annum, what is the price of the European put option?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT