Equating theoretical option price and the market option price, we can solve for implied indicators. Which is appropriate to be used as a quote for option? a) Implied strike price b) Implied volatility c) Implied risk-free rate d) None of the above

a)explain the concept of the delta normal method for calculating VAR when options are present in the portfolio.      b)explain the basic concepts of the historical method and the Monte Carlo simulation method of calculating VARs.       c)discuss the benefits and limitations of VAR.      d)define credit risk (default risk).       e)explain how option pricing theory can be used in valuing default risk.

Theta measures an option's: Multiple Choice O O intrinsic value. volatility. rate of time decay. sensitivity to changes in the value of the underlying asset. sensitivity to changes in the risk-free rate.

This is is the question related to the course "Financial Derivatives and Risk Management" Why are the probabilities of stock price movements not used in the binomialmodel for calculating an option’s price? What variables are used in it?

a)describe the major differences between forward contracts and option contracts.       b)discuss an arbitrage opportunity when an option is mispriced.    c) identify, analyze, and discuss the following characteristics of an American call option: maximum value, intrinsic value, time value, lower bound, and payoff at expiration.     d) analyze and discuss the following factors on an American call option: time to expiration, exercise price, interest rate, volatility, and dividends.

What impact does each of the followingparameters have on the value of a call option?(3) Option’s term to maturity

a) Futures contracts and options on futures contracts can be used to modify risk. Required:Identify the fundamental distinction between a futures contract and an option on a futures contract and explain the difference in the manner that futures and options modify portfolio risk.

Real Options & Game Theory: The value of a call option and a put option is influenced by the following variables: - Underlying asset value- Strike Price- Variance of Underlying asset- Time to Expiration What effect would an increase in each of these variables have on the value of a calloption and a put option?

a)define and explain convenience yield, and describe how it is incorporated into the futures pricing model.        b)discuss the debate on whether risk premium should be included in the pricing of futures and forward contracts.      c) define backwardation, normal backwardation, contango, and normal contango.      d) discuss the relationship between the prices of puts, calls, and forward/futures contracts on the same underlying asset using the put-call-forward/futures parity.      e) discuss the boundary conditions on the prices of American and European call option contracts on futures.

The market price paid for an option is best defined as: a. The strike price of the optionb. The option premiumc. The difference between the futures price and option priced. The time value of the option