Quiz Ch 21 – Features of Lookback Options
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
What is a characteristic of lookback options?
What is a characteristic of lookback options?
What happens to the value of put and call options when the volatility (variance) of the underlying stock rises considering things are constant?
What happens to the value of put and call options when the strike price of an option increases if all other factors remain constant?
What is the reason for including the present value of the exercise price in the Black-Scholes call formula instead of using the exercise price as is?
What does the term [N(d2) × PV(EX)] interpret in the Black-Scholes model?
What does N(d1) interpret in the Black-Scholes model?
What are the essential assumptions that justify the Black-Scholes formula?
What are the reasons for the inadequacy of the discounted cash-flow approach in valuing options?
How is the option delta depicted in the Black-Scholes formula?
What are the five parameters the Black-Scholes option pricing model utilizes?