Thursday, 16 June 2016

FIN 534 Week 11 Final Exam Part 1

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  • Which of the following statements is CORRECT?
    Selected Answer:
    Incorrect 
    Call options generally sell at a price less than their exercise value.
    Correct Answer:
    Correct 
    Call options generally sell at prices above their exercise value, but for an in-the-money option, the greater the exercise value in relation to the strike price, the lower the premium on the option is likely to be.
    ·         Question 2
    0 out of 2 points
    Which of the following statements is CORRECT?
    Selected Answer:
    Incorrect 
    Call options generally sell at a price below their exercise value, and the lower the exercise value, the lower the premium on the option is likely to be.
    Correct Answer:
    Correct 
    If the underlying stock does not pay a dividend, it does not make good economic sense to exercise a call option prior to its expiration date, even if this would yield an immediate profit.
    ·         Question 3
    2 out of 2 points
    Which of the following statements is CORRECT?
    Selected Answer:
    Correct 
    The market value of an option depends in part on the option's time to maturity and also on the variability of the underlying stock's price.
    Correct Answer:
    Correct 
    The market value of an option depends in part on the option's time to maturity and also on the variability of the underlying stock's price.
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