Five variables needed to estimate value of call option

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a) When investment managers present their historical performance records to prospective and existing customers /investors, market regulators require the managers to qualify those records with the comment that “past performance is no guarantee of future performance.” In an efficient market, why would such admonition be particularly appropriate?

b) Does the fact that the market exhibits a weak form of efficiency necessarily imply that it is also strong form efficient? How about the converse statement? Explain.

c) If the premium on a call option has recently declined, does this decline indicate that the option is a better buy than it was before? Why or why not?

d) List the five variables needed to estimate the value of a call option. Describe how a change in each of these variables affects the value of a call option.

Reference no: EM131903222

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