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- Which of the following is NOT a real option? A. An abandonment option B. An expansion option C. A stock option D. An investment timing optionWhat’s the difference between a financial optionand a real option? What are some specific typesof real options? Do real options just occur, or canthey be “created”?2: Explain carefully the difference between selling a call option and buying a put option. Explain it properly
- What impact does each of the followingparameters have on the value of a call option?(2) Strike priceWhich of the following best describes the intrinsic value of an option? The Black-Scholes-Merton price of the option The value it would have if the owner had to exercise it immediately or not at all The amount paid for the option The lower bound for the option’s priceWhat impact does each of the followingparameters have on the value of a call option?(3) Option’s term to maturity
- Explain the following terms, In-the money option and At-the-money option.What are the five factors that determine the value of an option, define how changes in each factor cause a change in the value of a call and put, and why do these factors cause either an increase or decrease in the value of a call or put option?Which of the following is NOT true of options? I. The writer decides whether the option will be exercised. II. The writer pays the buyer the option premium. III. The buyer decides if the option will be exercised. A. I, II, III B. I C. I, II D. II