金融quiz代做 The Economics of Financial Markets

Week 10 review questions

金融quiz代做 On the diagram you drew in Q4, assume the following information: X=10, S=7, p=1. Show the respective information on the diagram

1. What is the difference between a ‘covered’ versus a ‘naked’ option position?

2. Draw a net payoff diagram for a long call option.

3. On the diagram you drew in Q2, assume the following information: X=5, S=10, c=2. Show the respective information including the payoff on the diagram.  金融quiz代做

4. Draw a net payoff diagram for a short put option.

5. On the diagram you drew in Q4, assume the following information: X=10, S=7, p=1. Show the respective information on the diagram including the payoff.

6. 
   

   Can an option with zero intrinsic value have a positive price? Explain.  金融quiz代做

   
   

7. What are the major differences between an equity warrant and an option contract?

8. Outline the steps in deriving/proving the ‘bounds’ on option prices relative to their underlying asset prices.

9. Why is a call option never worth more than the value of its underlying asset?

10. Define the put call parity relationship and prove an arbitrage opportunity exists if the equality of the relationship is violated.  金融quiz代做

11. Explain the payoff in different states of the world to bond holders under the Modigliani-Miller theorem.

12. Explain the obligation on the writer of a put option over a futures contract upon exercise.

13. Check the calculation of the net effective interest rate in the table provided on p502 of Bailey when the market rate of interest is 7%.

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