Binomial Approach MCQ (Multiple Choice Questions) PDF Download

In binomial approach of option pricing model, the value of stock is subtracted from call option obligation value to calculate

1. current value of portfolio
2. future value of portfolio
3. put option value
4. call option value

The current value of stock in portfolio with current option price $20 is $50, then present value of portfolio would be

1. 30
2. 70
3. 0.0167
4. 0.3

The value of stock is $250 and the call option obligation is $100 then the current value of portfolio would be

1. 0.35
2. 150
3. 350
4. 2.5

In binomial approach of option pricing model, the fourth step is to create

1. equalize the domain of payoff
2. equalize the ending price
3. riskless investment
4. high risky investment

The current value of portfolio is $550 and to cover an obligation of call option is $200 then the value of stock would be

1. 350
2. 0.0275
3. 750
4. 2.75