Financial Options and Applications in Corporate Finance
The present value of portfolio is $500 and the current option price is $1200 then the value of stock included in portfolio will be
1700
−$1700
700
−$700
1700
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According to the Black Scholes model, the short term seller receives today’s price whichA. short term cash proceeds
B. proceeds in cheques
C. full cash proceeds
D. zero proceeds
According to the Black Scholes model, the selling and buying of the stock have
A. discount rate
B. transaction costs
C. no transaction costs
D. no discounts
In an option pricing, a rises in risk free rate results in option’s value
A. slight time decreases
B. slight increases
C. slight decreases
D. slight time increases
The current value of portfolio is $550 and to cover an obligation of call option is $200 then the value of stock would be
A. 350
B. 0.0275
C. 750
D. 2.75 times
An option that gives investors the right to sell a stock at predefined price is classified as
A. put option
B. call option
C. money back options
D. out of money options
The present value of portfolio is $900 and the current value of stock in portfolio is $1500 then the current option price would be
A. 2400
B. −$600
C. −$2400
D. 600
According to the Black Scholes model, the stocks with the call option pays the
A. dividends
B. no dividends
C. current price
D. past price
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