TRUE/FALSE QUESTIONS:
(a) Suppose Tesla stock price is $200 per share. You temporarily had a super power and find that Tesla is undervalued and its fair price should be $203. Therefore, if you buy Tesla stocks, your net return will be 1.5.
(b) If the stock price goes down and volatility goes up, the put option price should drop.
(c) A portfolio’s net return is a weighted arithmetic average of the net returns of its constituents while the portfolio’s long-term holding period return is the sum of the net returns of the portfolio in each period.
(d) After the stock market crash in 1987, the smile in implied volatility curve becomes a smirk (asymmetric curve shape)