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What is themost likelyresult of a decrease in the risk-free rate of return on put and call option prices?

A. Put and call prices will increase.
B. Put option prices will decrease and call option prices will increase.
C. Put option prices will increase and call option prices will decrease.

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A European stock index call option has a strike price of ＄1,160 and a time to expiration of 0.25 years. Given a risk-free rate of 4%, if the underlying index is trading at ＄1,200 and has a multiplier of 1, then the lower bound for the option price is closest to:

A. ＄51.32.
B. ＄28.29.
C. ＄40.00.

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A European call option on a non-dividend paying stock with a strike price of ＄25.00 expires in 3 months. The underlying stock currently trades at ＄29.00. The risk-free rate is 5.00%. The lower bound for the European call is closest to:

A. ＄0.00.
B. ＄4.00.
C. ＄4.30.

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Prior to expiration, the lowest value of a European put option is the greater of zero or the:

A. exercise price minus the value of the underlying.
B. present value of the exercise price minus the value of the underlying.
C. value of the underlying minus the present value of the exercise price.

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Facebook (FB)'s current stock price is $75.89. A broker's market for the put option on the $80 strike expiring in 2 days is $3.75 bid at $4.00. Assuming no execution risk, what trade do you want to execute? Assume that the risk-free interest rate is 0%, FB does not issue dividends, and that there are no transaction costs.

A. Definitely buy $4.00
B. Need more information
C. Definitely sell $3.75
D. The market is fairly priced

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What is themost likelyresult of a decrease in the risk-free rate of return on put and call option prices?

A. Put and call prices will increase. B. Put option prices will decrease and call option prices will increase. C. Put option prices will increase and call option prices will decrease.

A European stock index call option has a strike price of ＄1,160 and a time to expiration of 0.25 years. Given a risk-free rate of 4%, if the underlying index is trading at ＄1,200 and has a multiplier of 1, then the lower bound for the option price is closest to:

A European call option on a non-dividend paying stock with a strike price of ＄25.00 expires in 3 months. The underlying stock currently trades at ＄29.00. The risk-free rate is 5.00%. The lower bound for the European call is closest to:

Prior to expiration, the lowest value of a European put option is the greater of zero or the:

A. Put and call prices will increase.
B. Put option prices will decrease and call option prices will increase.
C. Put option prices will increase and call option prices will decrease.