The following price quotations were taken from the Wall Street Journal. $\begin{array}{rrr} \text { Stock Price}&\text { Strike }&\text { February }\\ &\text { Price }&\\ 917 / 8 & 85 & 73 / 8 \\ 917 / 8 & 90 & 31 / 8 \\ 917 / 8 & 95 & 5 / 8 \end{array}$ The premium on one February 90 call contract is

A) $3.1250. B) $318.00. C) $312.50. D) $58.00. A) $3.1250. B) $318.00. C) $312.50. D) $58.00. C

The following price quotations on WFM were taken from the Wall Street Journal. $\begin{array}{rrr} \text { Stock Price}&\text { Strike }&\text { February }\\ &\text { Price }&\\ 927 / 8 & 85 & 87 / 8 \\ 927 / 8 & 90 & 41 / 8 \\ 927 / 8 & 95 & 15 / 8 \end{array}$ The premium on one WFM February 90 call contract is

A) $4.1250. B) $418.00. C) $412.50. D) $158.00. A) $4.1250. B) $418.00. C) $412.50. D) $158.00.

Exam 20: Options Markets: Introduction

The following price quotations were taken from the Wall Street Journal. Stock Price Strike February Price 917/8 85 73/8 917/8 90 31/8 917/8 95 5/8 The premium on one February 90 call contract is

Free

(Multiple Choice)

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Question 1

Correct Answer:

Verified

HighFlyer Stock currently sells for $48. A one-year call option with strike price of $55 sells for $9, and the risk-free interest rate is 6%. What is the price of a one-year put with strike price of $55?

Free

(Multiple Choice)

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Question 2

Correct Answer:

Verified

Asian options differ from American and European options in that

Free

(Multiple Choice)

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Question 3

Correct Answer:

Verified

The current market price of a share of CSCO stock is $75. If a call option on this stock has a strike price of $70, the call

(Multiple Choice)

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Question 4

You purchase one ONB 200 call option for a premium of $6. Ignoring transaction costs, the break-even price of the position is

(Multiple Choice)

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Question 5

All of the following factors affect the price of a stock option except

(Multiple Choice)

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Question 6

Some more "traditional" assets have option-like features; some of these instruments include

(Multiple Choice)

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Question 7

You purchase one June 70 put contract for a put premium of $4. What is the maximum profit that you could gain from this strategy?

(Multiple Choice)

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Question 8

Buyers of put options anticipate the value of the underlying asset will __, and sellers of call options anticipate the value of the underlying asset will .

(Multiple Choice)

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Question 9

Suppose the price of a share of Google stock is $500. An April call option on Google stock has a premium of $5 and an exercise price of $500. Ignoring commissions, the holder of the call option will earn a profit if the price of the share

(Multiple Choice)

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Question 10

A European put option can be exercised

(Multiple Choice)

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Question 11

You purchased a call option for $3.45 17 days ago. The call has a strike price of $45, and the stock is now trading for $51. If you exercise the call today, what will be your holding-period return? If you do not exercise the call today and it expires, what will be your holding-period return?

(Multiple Choice)

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Question 12

A call option on a stock is said to be at the money if

(Multiple Choice)

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Question 13

The lower bound on the market price of a convertible bond is

(Multiple Choice)

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Question 14

The following price quotations on WFM were taken from the Wall Street Journal. Stock Price Strike February Price 927/8 85 87/8 927/8 90 41/8 927/8 95 15/8 The premium on one WFM February 90 call contract is

(Multiple Choice)

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Question 15

A European call option allows the buyer to

(Multiple Choice)

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Question 16

A dividend paying stock is currently selling for $32. The price of a $30 strike call with a 6 month expiration is $3.10. If the interest rate is 3%, what is the price of the put option assuming the dividend is paid in 6 months and is $0.50?

(Multiple Choice)

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Question 17

A dividend paying stock is currently selling for $47. The price of a $50 strike call with a 6 month expiration is selling for $2.20. If the interest rate is 4%, what is the price of the put option assuming a dividend is paid in 6 months and is $1.20?

(Multiple Choice)

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Question 18

What happens to an option if the underlying stock has a 2-for-1 split?

(Multiple Choice)

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Question 19

Derivative securities are also called contingent claims because

(Multiple Choice)

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Question 20

Showing 1 - 20 of 107

Exam 20: Options Markets: Introduction

The following price quotations were taken from the Wall Street Journal. Stock Price Strike February Price 917/8 85 73/8 917/8 90 31/8 917/8 95 5/8 The premium on one February 90 call contract is

HighFlyer Stock currently sells for $48. A one-year call option with strike price of $55 sells for $9, and the risk-free interest rate is 6%. What is the price of a one-year put with strike price of $55?

Asian options differ from American and European options in that

The current market price of a share of CSCO stock is $75. If a call option on this stock has a strike price of $70, the call

You purchase one ONB 200 call option for a premium of $6. Ignoring transaction costs, the break-even price of the position is

All of the following factors affect the price of a stock option except

Some more "traditional" assets have option-like features; some of these instruments include

You purchase one June 70 put contract for a put premium of $4. What is the maximum profit that you could gain from this strategy?

Buyers of put options anticipate the value of the underlying asset will __________, and sellers of call options anticipate the value of the underlying asset will ________.

Suppose the price of a share of Google stock is $500. An April call option on Google stock has a premium of $5 and an exercise price of $500. Ignoring commissions, the holder of the call option will earn a profit if the price of the share

A European put option can be exercised

You purchased a call option for $3.45 17 days ago. The call has a strike price of $45, and the stock is now trading for $51. If you exercise the call today, what will be your holding-period return? If you do not exercise the call today and it expires, what will be your holding-period return?

A call option on a stock is said to be at the money if

The lower bound on the market price of a convertible bond is

The following price quotations on WFM were taken from the Wall Street Journal. Stock Price Strike February Price 927/8 85 87/8 927/8 90 41/8 927/8 95 15/8 The premium on one WFM February 90 call contract is

A European call option allows the buyer to

A dividend paying stock is currently selling for $32. The price of a $30 strike call with a 6 month expiration is $3.10. If the interest rate is 3%, what is the price of the put option assuming the dividend is paid in 6 months and is $0.50?

A dividend paying stock is currently selling for $47. The price of a $50 strike call with a 6 month expiration is selling for $2.20. If the interest rate is 4%, what is the price of the put option assuming a dividend is paid in 6 months and is $1.20?

What happens to an option if the underlying stock has a 2-for-1 split?

Derivative securities are also called contingent claims because

The Investment Environment

Asset Classes and Financial Instruments

How Securities Are Traded

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

Capital Allocation to Risky Assets

Efficient Diversification

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Empirical Evidence on Security Returns

Bond Prices and Yields

The Term Structure of Interest Rates

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation Models

Financial Statement Analysis

Option Valuation

Futures Markets

Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

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Buyers of put options anticipate the value of the underlying asset will __, and sellers of call options anticipate the value of the underlying asset will .