Question

The European put price plus the stock price must be __________ (lower, equal, or higher) the European call price plus the __________ (present or future) value of the strike price.

3.A European put option is always worth _______________ (less than, equal, or more than) the present value of the strike price. A European call option is always worth ________________ (less than, equal, or more than) the stock price. An American call option is always worth ______________ (less than, equal, or more than) the stock price

Answer #1

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The European put price plus the stock price must be __EQUAL________ (lower, equal, or higher) the European call price plus the ___PRESENT_______ (present or future) value of the strike price.

3.A European put option is always worth __LESS_____________ (less than, equal, or more than) the present value of the strike price. A European call option is always worth ________LESS________ (less than, equal, or more than) the stock price. An American call option is always worth _LESS_____________ (less than, equal, or more than) the stock price

Which of the following option is false? Select the most suitable
answer. Select one:
a. The European put price plus the stock price must equal the
European call price plus the present value of the strike price.
b. For American options, put-call parity provides an upper and a
lower bound for the difference between call and put prices.
c. For American options without dividend payment, the difference
between call and put prices should be higher than or equal to the...

For a European option, if the stock price on the expiration day
is higher than the strike price, we call it
A.
“in the money” if it is a put option
B.
“at the money” if it is a call option
C.
“at the money” if it is a put option
D.
“out of the money” if it is a put option
E.
“out of the money” if it is a call option

For a European call option and a European put option on the same
stock, with the same strike price and time to maturity, which of
the following is true?
A) Before expiration, only in-the-money options can have
positive time premium.
B) If you have a portfolio of protected put, you can replicate
that portfolio by long a call and hold certain amount of risk-free
bond.
C) Since both the call and the put are risky assets, the
risk-free interest rate...

For a European call option and a European put option on the same
stock, with the same strike price and time to maturity, which of
the following is true?
A) When the call option is in-the-money and the put option is
out-of-the-money, the stock price must be lower than the strike
price.
B) The buyer of the call option receives the same premium as the
writer of the put option.
C) Since both the call and the put are risky...

A European put option is currently worth $3 and has a strike
price of $17. In four months, the put option will expire. The stock
price is $19 and the continuously compounding annual risk-free rate
of return is .09. What is a European call option with the same
exercise price and expiry worth? Also, given that the price of the
call option is $5, show how is there an opportunity for
arbitrage.

The price of a stock is $40. The price of a one-year European
put option on the stock with a strike price of $30 is quoted as $7
and the price of a one-year European call option on the stock with
a strike price of $50 is quoted as $5. Suppose that an investor
buys 100 shares, shorts 100 call options, and buys 100 put options.
Draw a diagram illustrating how the investor’s profit or loss
varies with the stock...

Consider a European call option and a European put option on a
non dividend-paying stock. The price of the stock is $100 and the
strike price of both the call and the put is $104, set to expire in
1 year. Given that the price of the European call option is $9.47
and the risk-free rate is 5%, what is the price of the European put
option via put-call parity?

An American put option on a share of stock is more
likely to be exercised early if
Group of answer choices
The underlying stock has high volatility.
The underlying stock price is equal to the strike price of the
option.
The underlying stock price is much higher than the strike price
of the option.
The underlying stock price is much lower than the strike price
of the option.

The price of a stock is $40. The price of a one-year European
put option on the stock with a strike price of $30 is quoted as $7
and the price of a one-year European call option on the stock with
a strike price of $50 is quoted as $5. Suppose that an investor
buys 100 shares, shorts 100 call options, and buys 100 put
options.
a) Construct a payoff and profit/loss table
b) Draw a diagram illustrating how the...

True/False
- The value of a European call is higher for lower strike
prices.
- According to Put-Call Parity, a stock is equivalent to a long
call, short put and long risk-free bond.

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