投资学精要(博迪)(第五版)习题答案英文版chapter1415.pdfVIP

th Essentials of Investments (BKM 5 Ed.) Answers to Suggested Problems – Lecture 8 Handout: Answers to the options handout are provided at the back of the handout. Chapter 14: 1. C is false. This is the description of the payoff to a put, not a call. (Note the book uses the term “value”. It is actually more appropriate to think of these statements as the “payoffs” to the various option positions.) 2. C is the only correct statement. The payoffs in (a) and (b) should be reversed, and (d) should instead read “prices equaling or exceeding $80.” 3. Each contract is for 100 shares: $7.25 × 100 = $725 4. Cost Payoff Profit Call option, X = 65 4.50 5.00 +0.50 Put option, X = 65 0.70 0.00 -0.70 Call option, X = 70 1.35 0.00 -1.35 Put option, X = 70 2.45 0.00 -2.45 Call option, X = 75 0.30 0.00 -0.30 Put option, X = 75 6.30 5.00 -1.30 6. a. Purchase a straddle, i.e., both a put and a call on the stock. The total cost of the straddle would be $10 + $7 = $17. b. Since the straddle cost $17, this is the amount by which the stock would have to move in either direction for the profit on either the call or put to cover the investment cost (not including time value of money considerations). 7. a. Sell a straddle, i.e., sell a call and a put to realize premium income of $4 + $7 = $11. b. If the stock ends up at $50, both the options will be worthless and your profit will be $11. This is your maximum possible profit since at any other st