{"id":53528,"date":"2024-04-15T23:55:17","date_gmt":"2024-04-15T23:55:17","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=53528"},"modified":"2024-04-15T23:55:17","modified_gmt":"2024-04-15T23:55:17","slug":"current-value-of-portfolio-is-rs-550-and-to-cover-an-obligation-of-call-option-is-rs-200-then-value-of-stock-would-be","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/current-value-of-portfolio-is-rs-550-and-to-cover-an-obligation-of-call-option-is-rs-200-then-value-of-stock-would-be\/","title":{"rendered":"Current value of portfolio is Rs 550 and to cover an obligation of call option is Rs 200 then value of stock would be"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;Rs 350.00&#8243; option2=&#8221;Rs 275.00&#8243; option3=&#8221;Rs 750.00&#8243; option4=&#8221;Rs 1,000.00&#8243; correct=&#8221;option1&#8243;]<!--more--><\/p>\n<p>The correct answer is A. Rs 350.00.<\/p>\n<p>A call option is a contract that gives the buyer the right, but not the obligation, to buy a specified amount of an underlying asset at a specified price on or before a specified date. The seller of the call option is obligated to sell the asset at the specified price if the buyer exercises the option.<\/p>\n<p>The value of a call option is determined by the following factors:<\/p>\n<ul>\n<li>The strike price: The strike price is the price at which the buyer of the call option can purchase the underlying asset.<\/li>\n<li>The expiration date: The expiration date is the date by which the buyer of the call option must exercise the option.<\/li>\n<li>The volatility of the underlying asset: The volatility of an asset is a measure of its price movement. A higher volatility means that the price of the asset is more likely to move up or down in a short period of time.<\/li>\n<li>The interest rate: The interest rate is the cost of borrowing money. A higher interest rate means that the value of a call option is lower.<\/li>\n<li>The dividend yield of the underlying asset: The dividend yield is the amount of money that a company pays out in dividends per share. A higher dividend yield means that the value of a call option is lower.<\/li>\n<\/ul>\n<p>In this case, the current value of the portfolio is Rs 550 and the obligation of the call option is Rs 200. This means that the buyer of the call option has the right to purchase the underlying asset at a price of Rs 200. The value of the call option is therefore Rs 550 &#8211; Rs 200 = Rs 350.<\/p>\n<p>Option B is incorrect because the value of the stock cannot be less than the obligation of the call option. Option C is incorrect because the value of the stock cannot be greater than the current value of the portfolio. Option D is incorrect because the value of the stock cannot be greater than the strike price.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;Rs 350.00&#8243; option2=&#8221;Rs 275.00&#8243; option3=&#8221;Rs 750.00&#8243; option4=&#8221;Rs 1,000.00&#8243; correct=&#8221;option1&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[945],"tags":[],"class_list":["post-53528","post","type-post","status-publish","format-standard","hentry","category-financial-management","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Current value of portfolio is Rs 550 and to cover an obligation of call option is Rs 200 then value of stock would be<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/current-value-of-portfolio-is-rs-550-and-to-cover-an-obligation-of-call-option-is-rs-200-then-value-of-stock-would-be\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Current value of portfolio is Rs 550 and to cover an obligation of call option is Rs 200 then value of stock would be\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;Rs 350.00&#8243; 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