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Hello mr john, for options questions must be test all exercise prices?
and for collar , are we penalised if we take the same exercise price rather than a higher one?I will answer your question, but in future if you want me to answer then you must ask in the Ask the ACCA Tutor Forum. This forum is for students to help each other.
The ideal would be to show all exercise prices if you have the time. However most of the marks will be for proving you know how options work, so if you are short of time you will get most of the marks by just showing one (but make it clear that there are other possibilities).
With regard to a collar, best to choose two different exercise prices (then you really do have a collar) but it is a nice point to make that if you choose the same exercise price then it is effectively a way of fixing the rate.
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