Reference no: EM131133248

1. Mark bought a call option ten days ago on a stock, the call expires at the end of the year and has a strike price of 50. John bought a call option on the same stock yesterday, the call also expires at the end of the year and has a strike price of 50. Today, who's option has a higher value, Mark's or John's?

2. knowing A ree pros ems, i i e op tons ave e same expzra ton me an same strike K. For the price of a bather option, the argument is the value of the bather. For example, C_w,.._and._in(50) is the price of an up-and-in call option with a barrier of 50.

2.   Which of the following is true? Where C is the value of a regular call option.

A.   Cup-and-in(⁵⁰) + Cup-and-out(⁵⁰) = C               B.       C_up._and.i„(50) - Cup-and-out(⁵⁰) = C

C. -C„_p.„„d_i_n (50) _{C„p-and-out} (50) = C              D. -Cup.and-in(50) - Cup.and-out (50) = C

3.   A portfolio consists of an up-and-in call with a barrier of 50 and an up-and-in call with a barrier of 60. Describe the payoff of the protfolio at time T by filling in the table.

Up to time T	Time T Payoff
S did not hit 50
S hit 50, but did not hit 60
S hit 60

4.  An option has the following payoff at time T.

Up to time T	Time T Payoff
S did not hit 50	0
S hit 50, but did not hit 60	2(ST - Kr
S hit 60	(Sr - Kr

What is the premium of this option in terms of Cup-a„d-out(50), Cup-and-out(60), or C?