STATEMENT 1: Call options' value go up if the market perceives the underlying asset to be undervalued. STATEMENT 2: Put options' increase in value is parallel to the increase of risk of an investment. Both statements are true Both statements are false Only statement 1 is true Only statement 2 is true STATEMENT 1: Quantitative finance helps to allocate resources to provide the optimum returns. STATEMENT 2: Financial models are accurate. Both statements are true Both statements are false Only statement 1 is true Only statement 2 is true Volatility of the financial markets can be measured using the historical prices of an investment while payoff values in the Monte Carlo Simulation are summed then discounted in today's value. True False Risk free rate can be derived from a triple A rated commercial bonds and the estimated price of options is dependent on the expected return of an investor. True False Black Scholes Model is a continuous time model. This model emphasizes the uncertainty of values of an investment. True False
STATEMENT 1: Call options' value go up if the market perceives the underlying asset to be undervalued.
STATEMENT 2: Put options' increase in value is parallel to the increase of risk of an investment.
Both statements are true
Both statements are false
Only statement 1 is true
Only statement 2 is true
STATEMENT 1: Quantitative finance helps to allocate resources to provide the optimum returns.
STATEMENT 2: Financial models are accurate.
Both statements are true
Both statements are false
Only statement 1 is true
Only statement 2 is true
Volatility of the financial markets can be measured using the historical prices of an investment while payoff values in the Monte Carlo Simulation are summed then discounted in today's value.
True
False
Risk free rate can be derived from a triple A rated commercial bonds and the estimated price of options is dependent on the expected return of an investor.
True
False
Black Scholes Model is a continuous time model. This model emphasizes the uncertainty of values of an investment.
True
False
Monte Carlo methods is more advantageous with more uncertainties of data in the financial market. It can also be used for generating draws from a probability distribution.
False
True
If there's an expected down move of an investment, the difference should be multiplied with the probability and deducted from the overall up move, then, discounted back to get the price of options using the binomial model.
False
True
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