Mark Owns Both a March $20 Put and a March

question 10

Multiple Choice

Mark owns both a March $20 put and a March $20 call on Alpha stock. Which one of the following statements correctly relates to Mark's position? Ignore taxes and transaction costs.

• A) A price decrease in Alpha stock will increase the value of Mark's call option.
• B) A March $30 call is worth more than Mark's $20 call.
• C) The time premium on an April $20 put is less than the time premium on Mark's put. (Assume both puts expire in the same calendar year.)
• D) A price increase in Alpha stock from $26 to $28 will increase the value of Mark's put.
• E) If the intrinsic value of Mark's put increases by $1 then the intrinsic value of his call must either decrease by $1 or equal zero.

Distinguish the ethical considerations in using information from the internet.

Understand percentage calculations and apply them to determine parts of a whole in various contexts.

Analyze real-world scenarios to calculate total sales, revenue, or expenditure based on given percentages.

Calculate the change in quantities, such as time or salary, resulting from percentage increases or decreases.

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Definitions:

Quarts

A unit of liquid volume measurement in the United States, equal to a quarter of a gallon or approximately 0.946 liters.

Price Elasticity

Measures how the quantity demanded of a good responds to a change in price, indicating the sensitivity of demand to price changes.

Watches

Timekeeping devices worn on the wrist or carried, designed to show the time and often additional information like date or heart rate.

Per Capita Income

Per capita income is a measure of the average income earned per person in a given area or country, calculated by dividing the area's total income by its total population.