Chapter 16, Problem 5PS

In each of the following questions, you are asked to compare two options with parameters as given. The risk-free interest rate for all cases should be assumed to be $\text{6}\%$ . Assume the stocks on which these options are written pay no dividends. $\left(\text{LO 16}-\text{1}\right)$
a.

Put	T	X	0	Price of Put
A	$0.5$	$50$	$0.20$	$10$
B	$0.5$	$50$	$0.25$	$10$

Which put option is written on the stock with the lower price?
(1) A
(2) B
(3) Not enough information
b.

Put	T	X	0	Price of Put
A	$0.5$	$50$	$0.2$	$10$
B	$0.5$	$50$	$0.2$	$12$

Which put option must be written on the stock with the lower price?
(1) A
(2) B
(3) Not enough information
c.

Put	T	X	0	Price of Put
A	$50$	$50$	$0.2$	$12$
B	$55$	$50$	$0.2$	$10$

Which call option must have the lower time to expiration?
(1) A
(2) B
(3) Not enough information
d.

Call	T	X	0	Price of Call
A	$0.5$	$50$	$55$	$10$
B	$0.5$	$50$	$55$	$12$

Which call option is written on the stock with higher volatility?
(1) A
(2) B
(3) Not enough information
e.

Call	T	X	0	Price of Call
A	$0.5$	$50$	$55$	$10$
B	$0.5$	$55$	$55$	$7$

Which call option is written on the stock with higher volatility?
(1) A
(2) B
(3) Net enough information