Put/Calls Flashcards
1
Q
why does a call at strike 100 cost more than a call at strike 120?
A
as 100 is more profitable
1
Q
bear spread
A
makes money if price drops
2
Q
bull spread
A
makes money if price increases
3
Q
a derivative costs money if
A
payoff is greater than or equal to zero according to PP0
4
Q
two period model assumes
A
interest rate=0
5
Q
A
