1. Which of the following statements is NOT correct?
if there are TWO identical call options, but one:
a) Has a longer time to maturity, it will have a higher price.
b) Has a lower strike, it will have a higher price.
c) Has an underlying asset with a higher volatility of returns, then the option will have a higher price.
d) Has an underlying asset with a higher price, then the option will have a higher price.
e) Has a lower price, then it should be sold
2. A Retired Couple has decided to use Reverse Mortgage to supplement their Income by taking a Reverse Mortgage on their home currently valued at $350,000. A Bank has agreed to get into the deal with a Reverse Mortgage Rate of 5% over next 15 years for up to 80% of the home value. According to your calculation, the Couple could receive a Monthly Supplemental Income of:
a. $ 1,309
b. $ 2,214
c. $ 1,048
d. $ 1,557