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How will the call and put option prices change

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Reference no: EM132538938

1. The straddle investor bets on: A. Price B. Dividend C. Risk free rate D. Volatility

2. If the risk free rate has been increased, how will the call and put option prices change?

A. Increase; Decrease B. Decrease; Increase C. Increase; Increase D. Decrease; Decrease

3. The dividend discount model:

A. ignores capital gains. B. incorporates the after-tax value of capital gains. C. includes capital gains implicitly. D. restricts capital gains to a minimum

4. The liquidity preference theory contends that:

A. lenders prefer to buy securities at the short end of the yield curve. B. lenders prefer to buy securities at the long end of the yield curve. C. the yield curve is irrelevant. D. none of the above.

5. Other things equal, diversification is most effective when:

A. securities' returns are uncorrelated. B. securities' returns are positively correlated. C. securities' returns are high. D. securities' returns are negatively correlated.

Reference no: EM132538938

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