A Put Option on ABC Stock Currently Sells for $4

question 27

Multiple Choice

A put option on ABC stock currently sells for $4.00.The exercise price and the stock price is $60.The put option has a delta of 0.5.If within a short period of time the stock price increases to $60.10,what would be the change in the price of the put option?

• A)increases by $0.05
• B)decreases by $0.05
• C)increases by $0.10
• D)decreases by $0.10

Understand the application of agency principles to partnership operations and partner actions.

Comprehend the division of profits and losses and the factors affecting such division in partnerships.

Understand the basic mechanisms of gene expression regulation across different organisms.

Grasp the role and mechanisms of miRNA and siRNA in gene silencing.

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Definitions:

Interest Rate Risk

The risk that changes in interest rates will adversely affect the value of an investment, particularly relevant for fixed-income securities.

Bond Prices

The amount of money at which a bond is trading, which fluctuates based on interest rates, credit quality, and other factors.

Market Interest Rates

The prevailing rates at which borrowers can obtain loans and lenders can invest their funds in the financial markets.

Term Structure

Term Structure relates to the relationship between interest rates or bond yields and different terms or time to maturity, graphically represented as a yield curve.