Derivatives Quiz 12

If the interest rates increase the value of the put

• Increases

• Decreases

• Stays the same

If dividend payouts increase the value of the put

• Increases

• Decreases

• Stays the same

Positive Gamma has

• Negative theta

• Positive theta

• Neutral theta

Theta is also called

• Time value

• Time decay

• Time option

Barrier options are ……  than standard options

• More expansive

• More volatile

• Cheaper

When investing in a compound option,

• The holder of the compound option is entitled to pay the first strike price, K1, and receive a call option.

• The holder of the compound option is entitled to pay the first strike price, K2, and receive the underlying.

• The holder of the compound option is entitled to pay the second strike price, K2, and receive a call option.