Investment Strategies - Review Questions 23 - 27
- Which of the following statements concerning options pricing is correct?
- The Black-Scholes model is a discrete time pricing model, whereas the binomial model is referred to as continuous time.
- Binomial options pricing starts by considering two possible outcomes and one discrete period with the possibility of both assumptions being relaxed to accommodate actual market scenarios.
- Both binomial options pricing and the Black-Scholes models represent an options-specific application of the multi-factor model.
- None of the foregoing.
- None of the following choices constitute an acceptable use of options, except:
- Gaining low cost exposure to the underlying.
- Income generation.
- None of the foregoing.
- Each of the following attributes characterize a low option premium, except:
- Close expiration date.
- Low stock price and the option is a call.
- High stock price and the option is a put.
- Deep in-the-money-call.
- An option that allows exercise only at expiration is referred to as:
- Arrange the following options by premium in ascending order. Assume that the month is September.
- January 60 call, underlying trades at 57
- October 44 put, underlying trades at 41
- July 53 call, underlying trades at 58
- April 27 call, underlying trades at 29
- IV, I, III, II
- I, II, III, IV
- I, IV, III, II
- I, IV, II, III
- II, I, IV, III
Career Education & ResourcesIt was a big year for change within the RIA industry. Here are 2015's biggest mergers, acquisitions and buyouts.
Options & FuturesFutures have a number of advantages over options such as fixed upfront trading costs, lack of time decay and liquidity.
Products and InvestmentsThe 10 steps outlined here are essential to the creation of a new financial product.
ProfessionalsHere's an inside look at the workdays of two experienced CPAs, to give you an idea of what it might be like to pursue a career as a public accountant.
ProfessionalsThere’s no typical day in the life of a public accountant, but one accountant’s experience may shed some light on what the career entails.
Saving and SpendingRetirees who don't want to deplete their nest eggs during a bear market should make sure to do the following.
Mutual Funds & ETFsGet a brief overview of Fidelity's seven target risk funds, with a description of each fund's asset allocation and expense ratio.
Investing NewsWarning signs have started to emerge that point to a potentially dismal 2016 for the U.S. economy.
MarketsAlgorithmic HFT has a number of risks, and it also can amplify systemic risk because of its propensity to intensify market volatility.
Mutual Funds & ETFsExplore analyses of the top three Invesco mutual funds for retirement diversification in 2016, and learn about the characteristics of these target-date funds.
A modification of the Sharpe ratio that differentiates harmful ...
The excess return that investing in the stock market provides ...
The amount of risk that an insurance company retains after subtracting ...
Coverage that provides financial protection to investors, financial ...
The maximum loss from a peak to a trough of a portfolio, before ...
The absolute level of a fund's investments.
Different types of orders allow you to be more specific about how you'd like your broker to fulfill your trades. When you ... Read Full Answer >>
Secured loans are better for the borrower than unsecured loans because the loan terms are more agreeable. Often, the interest ... Read Full Answer >>
Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
Like all securities, mutual funds are subject to market, or systematic, risk. This is because there is no way to predict ... Read Full Answer >>
Mutual funds have become an incredibly popular option for a wide variety of investors. This is primarily due to the automatic ... Read Full Answer >>
While your auto insurance company cannot pull your full motor vehicle report, or MVR, it does pull a record summary that ... Read Full Answer >>