1. High volatility is bad for option holders because it increases the probability that the option will expire out-of-the-money.
True
False
2. The lower the exercise price, the less valuable the call option.
True
False
3. The spread between the prices of two European puts, alike in all respects except exercise price, cannot exceed the difference in their exercise prices.
True
False
4. A convertible bond is a put option.
True
False