Multiple Choice
You have $100 to invest in a stock (or options on the stock) . The stock is trading for $100. The three-month 100-strike calls on the stock are trading at $4 each. The minimum stock price you expect to see after three months is $60. What is the worst case return on investment you can possibly end up with using stock and/or options?
A) -100%
B) -40%
C) 0%
D) +6%
Correct Answer:
Verified
Correct Answer:
Verified
Q6: If you expect stock volatility to rise
Q7: You hold the following portfolio: a long
Q8: If you expect stock volatility to fall
Q9: You have $100 to invest. You can
Q10: You have a long position in a
Q12: You have a long position in a
Q13: I hold a long position in a
Q14: The writer of a put option on
Q15: For a call and a put written
Q16: An investor who holds a short call