Call and Premium Option Assignment


Call and Premium Option Assignment

6. Which one of the following strategy result in the highest profit, if the underlying stock price is $50?

A. Buying a call with X=$30 and Premium=$3.00

B. Buying a call with X=$35 and Premium=$2.00

C. Buying a call with X=$40 and Premium=$1.00

D. Selling a call with X=$60 and Premium=$5.00

E. Selling a call with X=$70 and Premium=$6.00

7. For the contract holder, the most likely advantage of contingent claims over forward commitments is that contingent claims

A. are easier to offset than forward commitments

B. have lower default risk than forward commitments

C. permit gains while protecting against losses

D. have longer expiration E. All above stion which one of the following factor will increase the European call option’s

8. For a call option, which premium for sure?

A. Longer expiration date

B. Higher interest rate

c. Lower Exercise Price

D. All above E. None above. Get Finance homework help today