What is the number of different option series used in creating a butterfly spread? ( )
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In a binomial tree created to value an option on a stock, the expected return on stock is ( )
A. Zero
B. The return required by the market
C. The risk-free rate
D. It is impossible to know without more information
In a binomial tree created to value an option on a stock, what is the expected return on the option? ( )
A. Zero
B. The return required by the market
C. The risk-free rate
D. It is impossible to know without more information
A stock is expected to return 10% when the risk-free rate is 4%. What is the correct discount rate to use for the expected payoff on an option in the real world? ( )
A. 4%
B. 10%
C. More than 10%
D. It could be more or less than 10%
What is the number of trading weeks in a year usually assumed for equities? ( )
A. 365
B. 252
C. 12
D. 52