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  • Quiz 9

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    Aarham Aziz
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    This document contains two quizzes with multiple choice and short answer questions about option pricing and Warren Buffett's views on derivatives. Quiz 1 at 1 PM contains 3 questions - the first asks about the exercise value of a put option in 6 months, the second asks to complete a table with option pricing factors, and the third asks for three reasons why Buffett considers derivatives to be "time bombs". Quiz 2 at 2:30 PM repeats the format with different stock prices in the first question and a different table to complete in the second question, asking again for Buffett's views on derivatives in the third question.

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    This document contains two quizzes with multiple choice and short answer questions about option pricing and Warren Buffett's views on derivatives. Quiz 1 at 1 PM contains 3 questions - the first asks about the exercise value of a put option in 6 months, the second asks to complete a table with option pricing factors, and the third asks for three reasons why Buffett considers derivatives to be "time bombs". Quiz 2 at 2:30 PM repeats the format with different stock prices in the first question and a different table to complete in the second question, asking again for Buffett's views on derivatives in the third question.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    5 views5 pages

    Quiz 9

    Uploaded by

    Aarham Aziz
    This document contains two quizzes with multiple choice and short answer questions about option pricing and Warren Buffett's views on derivatives. Quiz 1 at 1 PM contains 3 questions - the first asks about the exercise value of a put option in 6 months, the second asks to complete a table with option pricing factors, and the third asks for three reasons why Buffett considers derivatives to be "time bombs". Quiz 2 at 2:30 PM repeats the format with different stock prices in the first question and a different table to complete in the second question, asking again for Buffett's views on derivatives in the third question.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    Quiz 9 – 1 PM

    14 Nov 2023
    Question 1: Consider a 1-year put option on Stock X with an exercise price of
    USD 50. The initial stock price is USD 48. The risk-free rate is 4%. What is the
    exercise value of the option in six months if the spot price equals USD 47?
    Question 2: Complete the table below:
    Increase in Value of call option will Value of put option will
    Value of the underlying
    Exercise price
    Risk-free rate
    Time to expiration
    Volatility of the underlying
    Costs incurred while holding the underlying
    Benefits received while holding the underlying

    Question 3: Briefly give three reasons for why Warren Buffett considers
    derivatives to be time bombs.
    Quiz 9 – 2:30 PM
    Question 1: Consider a 1-year call option on Stock X with an exercise price of
    USD 50. The initial stock price is USD 48. The risk-free rate is 4%. What is the
    exercise value of the option in six months if the spot price equals USD 52?
    Question 2: Complete the table below:
    Call option Put option
    Increase in benefit associated with
    underlying asset.

    Increase in cost associated with


    underlying asset.

    Question 3: Briefly give three reasons for why Warren Buffett considers
    derivatives to be time bombs.

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