EC 380 UPDATED COMPREHENSIVE EXAM
QUESTIONS AND ANSWERS SURE A+
✔✔Long call payoff - ✔✔Max[BP − X, 0] − C.
✔✔Short call payoff - ✔✔C − Max[BP − X, 0].
✔✔Put option - ✔✔Right to sell an asset at strike price X.
✔✔Long put payoff - ✔✔Max[X − BP, 0] − P.
✔✔Short put payoff - ✔✔P − Max[X − BP, 0].
✔✔Long put hedge - ✔✔Creates downside protection while retaining upside potential.
✔✔Binomial option model - ✔✔Values options using probability-weighted expected
payoffs.
✔✔Put option valuation formula - ✔✔P = Expected payoff / (1 + risk-free rate).
✔✔Put macrohedge formula - ✔✔Np = [(DA − kDL) × A] / [δ × D × B].
QUESTIONS AND ANSWERS SURE A+
✔✔Long call payoff - ✔✔Max[BP − X, 0] − C.
✔✔Short call payoff - ✔✔C − Max[BP − X, 0].
✔✔Put option - ✔✔Right to sell an asset at strike price X.
✔✔Long put payoff - ✔✔Max[X − BP, 0] − P.
✔✔Short put payoff - ✔✔P − Max[X − BP, 0].
✔✔Long put hedge - ✔✔Creates downside protection while retaining upside potential.
✔✔Binomial option model - ✔✔Values options using probability-weighted expected
payoffs.
✔✔Put option valuation formula - ✔✔P = Expected payoff / (1 + risk-free rate).
✔✔Put macrohedge formula - ✔✔Np = [(DA − kDL) × A] / [δ × D × B].
