The Following Prices Are Available for Call and Put Options

question 28

Multiple Choice

The following prices are available for call and put options on a stock priced at $50.The risk-free rate is 6 percent and the volatility is 0.35.The March options have 90 days remaining and the June options have 180 days remaining.The Black-Scholes model was used to obtain the prices.
Use this information to answer questions 1 through 20.Assume that each transaction consists of one contract (for 100 shares) unless otherwise indicated.
-Suppose you wish to construct a ratio spread using the March and June 50 calls.You want to buy 100 June 50 call contracts.How many March 50 calls would you sell?

• A)105
• B)95
• C)100
• D)57
• E)none of the above

Understand the importance of customer and supplier involvement in the new-product development process.

Recognize various sources for new-product ideas including unconventional ones.

Describe the stages of the new-product development process and their significance.

Identify and differentiate between the sources of new-product ideas.

---

Definitions:

Specific Price

This term refers to the exact price of a particular item or security at a specified time.

Put Option

A put option is a financial contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

Call Option

An agreement in finance which allows the purchaser to have the option, but not the commitment, to purchase a certain amount of a specific asset at a pre-agreed price during a fixed period.

Specified Price

A predetermined price set in a contract or agreement, often related to sales or financial instruments.