FIN 402 Expect Success/uophelp.com FIN 402 Expect Success/uophelp.com | Page 31

19. Futures contracts are said to exhibit the property of convergence
because _______________.
20. A speculator will often prefer to buy a futures contract rather than the
underlying asset because
21. A 45 call option on a stock priced at $50 is priced at $6.50. This call
has an intrinsic value of ______ and a time value of _____.
22. Investor A bought a call option that expires in 6 months. Investor B
wrote a put option with a 9 month maturity. All else equal as the time to
expiration approaches the value of Investor A's position will ______ and
the value of Investor B's position will _______.
23. Investor A bought a call option and Investor B bought a put option. All
else equal if the interest rate rises the value of Investor A's position will
______ and the value of Investor B's position will _______.
24. Investor A bought a call option and Investor B bought a put option. All
else equal if the underlying stock price volatility increases the value of
Investor A's position will ______ and the value of Investor B's position
will _______.
25. The price of a stock put option is __________ correlated with the stock
price and __________ correlated with the exercise price.
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FIN 402 Week 5 Weekly Questions
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