Exam 13: Risk and the Pricing of Options
Exam 1: Corporate Finance and the Financial Manager93 Questions
Exam 2: Introduction to Financial Statement Analysis122 Questions
Exam 3: The Valuation Principle: the Foundation of Financial Decision Making120 Questions
Exam 4: The Time Value of Money101 Questions
Exam 5: Interest Rates118 Questions
Exam 6: Bonds122 Questions
Exam 7: Valuing Stocks122 Questions
Exam 8: Investment Decision Rules136 Questions
Exam 9: Fundamentals of Capital Budgeting108 Questions
Exam 10: Risk and Return in Capital Markets101 Questions
Exam 11: Systematic Risk and the Equity Risk Premium102 Questions
Exam 12: Determining the Cost of Capital107 Questions
Exam 13: Risk and the Pricing of Options112 Questions
Exam 14: Raising Equity Capital106 Questions
Exam 15: Debt Financing112 Questions
Exam 16: Capital Structure114 Questions
Exam 17: Payout Policy101 Questions
Exam 18: Financial Modelling and Pro Forma Analysis124 Questions
Exam 19: Working Capital Management122 Questions
Exam 20: Short-Term Financial Planning105 Questions
Exam 21: Risk Management111 Questions
Exam 22: International Corporate Finance113 Questions
Exam 23: Leasing88 Questions
Exam 24: Mergers and Acquisitions80 Questions
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Use the figure for the question(s)below.
-This graph depicts the payoffs of a:

(Multiple Choice)
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A call option on a stock has an exercise price of $14.If the stock price at expiration is $13.50,what is the option payoff for a long call position?
(Multiple Choice)
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________ options allow the holder to exercise the option only on the expiration date.
(Multiple Choice)
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When the exercise price of a call option is lower than the current price of the stock,the option is said to be:
(Multiple Choice)
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When the exercise price of an option is equal to the current price of the stock,the option is said to be:
(Multiple Choice)
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Although the payouts on a long position in an options contract are never negative,the profit from purchasing and holding it could be negative.
(True/False)
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Which of the following will increase the value of a call option?
(Multiple Choice)
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The price of a call option on Microsoft stock with a maturity of six months and a strike price of $40 is $3.50,and the price of the stock is $38.50.The price of a put option on the same stock with the same strike price and time to maturity is $1.25.Calculate the risk-free rate.
(Multiple Choice)
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The price of a European put option on Air Canada stock with an exercise price of $10 and one year to expiry is trading at $1.55.The current price of the stock is $11,and the risk-free rate is 5%.With no arbitrage,what must be the price of a European call on Air Canada with an exercise price of $10?
(Multiple Choice)
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