Contact Us:+1(573)2515625

FINANCE MULTIPLE CHOICE OPTIONS AND DERIVATIVES

FINANCE MULTIPLE CHOICE OPTIONS AND DERIVATIVES.

6.Which of the following statements about the volatility is not true? a. the implied volatility often differs across options with different exercise prices b. the implied volatility equals the historical volatility if the option is correctly priced c. the implied volatility is determined by trial and error d. the implied volatility is nearly linearly related to the option price e. none of the above
 
7.Consider a stock priced at $30 with a standard deviation of 0.3. The risk-free rate is 0.05. There are put and call options available at exercise prices of 30 and a time to expiration of six months. The calls are priced at $2.89 and the puts cost $2.15. There are no dividends on the stock and the options are European. Assume that all transactions consist of 100 shares or one contract (100 options). Use this information to answer questions 7 and
 
8. What is your profit if you buy a call, hold it to expiration and the stock price at expiration is $37? a. $32.89 b. $30.00 c. $27.11 d. $32.15 e. there is no breakeven
 
The profit = $411
 
I believe the choices provided are incorrect
 
8. Consider a stock priced at $30 with a standard deviation of 0.3. The risk-free rate is 0.05. There are put and call options available at exercise prices of 30 and a time to expiration of six months. The calls are priced at $2.89 and the puts cost $2.15. There are no dividends on the stock and the options are European. Assume that all transactions consist of 100 shares or one contract (100 options).
 
Use this information to answer questions 7 and 8. What is the break even stock price at expiration on the transaction described in problem 1? a. $32.89 b. $30.00 c. 27.11 d. $32.15 9. Consider two put options differing only by exercise price. The one with the higher exercise price has Select one: a. the lower breakeven and lower profit potential b. the lower breakeven and greater profit potential

FINANCE MULTIPLE CHOICE OPTIONS AND DERIVATIVES

Solution:

15% off for this assignment.

Our Prices Start at $11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!

Why US?

100% Confidentiality

Information about customers is confidential and never disclosed to third parties.

Timely Delivery

No missed deadlines – 97% of assignments are completed in time.

Original Writing

We complete all papers from scratch. You can get a plagiarism report.

Money Back

If you are convinced that our writer has not followed your requirements, feel free to ask for a refund.