Quiz Ch 20 – Commonly Used Options for Risk Reduction in Firms
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
In risk reduction, which options are commonly used by firms?
In risk reduction, which options are commonly used by firms?
What characteristics does a call option typically exhibit compared to the underlying stock?
Which of the characteristics enhances the value of a call option?
What determines the value of a put option at expiration?
How does a reduction in the volatility of the underlying asset impact the values of put and call options?
How does the payment of a dividend before the expiration of options impact their values?
How does the price of a call option generally change as the underlying stock price increases, assuming all other factors remain constant?
How does the price of a put option typically respond when the underlying stock price increases, assuming all other factors remain constant?
What factors exhibit a positive relationship with the value of a call option?
What factors are positively associated to the value of both call and put options?