You Find the Option Prices for Three June Call Options

question 30

Multiple Choice

You find the option prices for three June call options on the same stock. The 95 call has an implied volatility of 25%, the 100 call has an implied volatility of 25%, and the 105 call has an implied volatility of 30%. If you believe this represents a mispricing situation. you may want to ________.

• A) buy the 105 call and write the 100 call
• B) buy the 105 call and write the 95 call
• C) buy either the 95 or the 100 call and write the 105 call
• D) write the 105 call and write either the 95 or the 100 call

Recognize the nondiscriminatory requirements for qualified pension plans.

Understand the tax implications of distributions from retirement plans and other tax-deferred planning instruments.

Identify the maximum contribution limits for 401(k) plans and the conditions under which contributions are made.

Distinguish between different retirement plans and their tax consequences.

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Definitions:

Assessment Instruments

Tools or methods used to evaluate, measure, or test certain abilities, skills, or characteristics in individuals.

Negatively Correlated

A relationship between two variables in which one variable increases as the other decreases, and vice versa.

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The dimensions or area of a room, which can influence its use, capacity, and the perception of space within it.

Ocean Temperature

A measure of the heat content of the oceans, which influences climate and weather patterns globally.