Quiz Ch 20 – Factors Affecting Option Value
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
What factors are positively associated to the value of both call and put options?
What factors are positively associated to the value of both call and put options?
What factors display a negative relationship with the value of a call option?
What factors exhibit a positive relationship with the value of a put option?
What is the geometric connection between the position diagram for a put option and the diagram for a call option on the same stock, considering they share the same exercise price and maturity?
Which can be considered as instances of “disguised options”?
How does the put-call parity relation change if the stock pays a dividend before the expiration date?
How does a rise in the risk-free interest rate typically affect call option prices?
What is the investment value on the final exercise date when the stock price is below the exercise price if an investor owns one share of stock and a put option?
What is the investment’s value on the final exercise date if an investor holds one share of stock, a put option, and has also sold a call option on the same stock with an identical exercise price?
Who among the investors would be content with a significant surge in the stock price?