Question

2. An American put option can be exercised: a. b. c. d. e. At any time on or before the expiration date. Only on the expiration date. Any time in the indefinite future. Only after the dividend has been paid. None of the above. 3. A European call option can be exercised: a. Any time in the future. b. Only on the expiration date. c. If the price of the underlying asset declines below the exercise price. d. Immediately after the dividends are paid. e. Once the Bloomberg derivative index hits a certain level. f. None of the above. 4. To adjust for stock splits: The exercise price of the option is reduced by the factor of the split and the number of options held is increased by that factor. The exercise price of the option is increased by the factor of the split and the number of options held is reduced by that factor. The exercise price of the option is reduced by the factor of the split and the number of options held is reduced by that factor. The excursive price of the option is increased by the factor of the split and the number of options held is increase by that factor. None of the above. a. b. c. d. e. The current stock price of a share of Boeing is $75.00. If a call option on this stock has a strike price of $70, the call: 5. a. b. c. d. Is out of the money. Is in the money. Sells for a higher price than if the market price of Boeing stock is $70.00 Is out of the money and sells for a higher price than if the market price of Boeing stock is $70.00 Is in the money and sells for a higher price than if the market price of Boeing stock is $70.00 e.