A speculator may write a put option on stock with an exercise price of $15 and earn a $3 premium only if he thought: a. the stock price would stay above $12. b. the stock volatility would increase. c. the stock price would fall below $18. d. the stock price would stay above $15. e. the stock price would rise above $18 or fall below $12.
A speculator may write a put option on stock with an exercise price of $15 and earn a $3 premium only if he thought: a. the stock price would stay above $12. b. the stock volatility would increase. c. the stock price would fall below $18. d. the stock price would stay above $15. e. the stock price would rise above $18 or fall below $12.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
A speculator may write a put option on stock with an exercise price of $15 and earn a $3 premium only if he thought:
a.
the stock price would stay above $12.
b.
the stock volatility would increase.
c.
the stock price would fall below $18.
d.
the stock price would stay above $15.
e.
the stock price would rise above $18 or fall below $12.
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