Which one of the following can be sold prior to expiration? Group of answer choices Call options can be sold prior to expiration but put options cannot. Put options can be sold prior to expiration but call options cannot. No option can be sold prior to expiration. Both American and European options can be sold prior to expiration

Which one of the following can be sold prior to expiration? Group of answer choices Call options can be sold prior to expiration but put options cannot. Put options can be sold prior to expiration but call options cannot. No option can be sold prior to expiration. Both American and European options can be sold prior to expiration

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Pricing of ________ options tends to be more difficult due to embedded early exercise feature, while the exercise of _______ options is only allowed at expiration date
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Define American option
the buyer of the option is not obliged to complete the deal and will do so only if changes in price make it profitable to do so True or Flase
Which of the following statements about European option contracts is TRUE? a. Typically American options are cheaper than otherwise similar European options due to the uncertainty regarding the date of exercise. b. One can synthesise a long forward position in the underlying by being long a call and short a put c. A long call position and a short put position both involve buying the underlying and so are equivalent d. The price of an option can be obtained by computing the true probabilities of each state of nature, working out the expected option payoff across those states and then discounting back to the present.
All of the following are reasons for engaging in swaptions, which one is not? a. Swaptions are utilized by parties who anticipate the need for a swap at a later date but want to lock in a set rate today while keeping the option of not engaging in the swap later or engaging in the swap at a better market rate.b. Swaptions are used by parties entering into a swap to give them the flexibility to terminate the swap.c. Swaptions are used by parties to speculate on interest rates.d. To create a stream of equivalent payments or annuity on the type of swaption.
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Determine, generally based on justification, in what manner does seller a put option set targeted?
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