Exhibit 20.7 Use the Information Below for the Following Problem(S) The current stock price of Zanco Corporation is $50. Zanco Corporation has the following put and call option prices with exercise prices at $45 and $50. \[\begin{array} { c c c } \text { Exprcisp Price } & \text { Put Price } & \text { Call Price } \\ \$ 45 & \$ 1.50 & \$ 6.75 \\ \$ 50 & \$ 3.75 & \$ 4.25 \end{array}\] -Refer to Exhibit 20.7.The time premium for the put option with a $45 exercise price is

A) $0.00 B) $1.50 C) $2.75 D) $5.25 E) $6.50 A) $0.00 B) $1.50 C) $2.75 D) $5.25 E) $6.50

Exhibit 20.7 Use the Information Below for the Following Problem(S) The current stock price of Zanco Corporation is $50. Zanco Corporation has the following put and call option prices with exercise prices at $45 and $50. \[\begin{array} { c c c } \text { Exprcisp Price } & \text { Put Price } & \text { Call Price } \\ \$ 45 & \$ 1.50 & \$ 6.75 \\ \$ 50 & \$ 3.75 & \$ 4.25 \end{array}\] -Refer to Exhibit 20.7.The time premium for the call option with a $50 exercise price is

A) $0.00 B) $1.50 C) $1.75 D) $4.25 E) $9.25 A) $0.00 B) $1.50 C) $1.75 D) $4.25 E) $9.25

Exam 20: An Introduction to Derivative Markets and Securities

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Datacorp stock currently trades at $50.August call options on the stock with a strike price of $55 are priced at $5.75.October call options with a strike price of $55 are priced at $6.25.Calculate the value of the time premium between the August and October options.

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Question 61

A stock currently sells for $75 per share.A put option on the stock with an exercise price $70 currently sells for $0.50.The put option is

(Multiple Choice)

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Question 62

Futures differ from forward contracts because

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Question 63

The minimum value of an option is zero.

(True/False)

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Question 64

The value of a call option just prior to expiration is (where V is the underlying asset's market price and X is the option's exercise price)

(Multiple Choice)

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Question 65

Exhibit 20.2 Use the Information Below for the Following Problem(S) A futures contract on Treasury bond futures with a December expiration date currently trade at 103:06. The face value of a Treasury bond futures contract is $100,000. Your broker requires an initial margin of 10%. -Refer to Exhibit 20.2.If the futures contract is quoted at 105:08 at expiration calculate the percentage return.

(Multiple Choice)

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Question 66

A call option in which the stock price is higher than the exercise price is said to be

(Multiple Choice)

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Question 67

The derivative based strategy known as portfolio insurance involves

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Question 68

Assume that you purchased shares of a stock at a price of $35 per share.At this time you wrote a call option with a $35 strike and received a call price of $2.The stock currently trades at $70.Calculate the dollar return on this option strategy.

(Multiple Choice)

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Question 69

A one year call option has a strike price of 50,expires in 6 months,and has a price of $5.04.If the risk free rate is 5%,and the current stock price is $50,what should the corresponding put be worth?

(Multiple Choice)

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Question 70

Exhibit 20.7 Use the Information Below for the Following Problem(S) The current stock price of Zanco Corporation is $50. Zanco Corporation has the following put and call option prices with exercise prices at $45 and $50. Exprcisp Price Put Price Call Price \ 45 \ 1.50 \ 6.75 \ 50 \ 3.75 \ 4.25 -Refer to Exhibit 20.7.The time premium for the put option with a $45 exercise price is

(Multiple Choice)

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Question 71

The option premium is the price the call buyer will pay to the option seller if the option is exercised.

(True/False)

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Question 72

A stock currently trades at $110.June call options on the stock with a strike price of $105 are priced at $4.Calculate the arbitrage profit that you can earn.

(Multiple Choice)

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Question 73

A forward contract gives its holder the option to conduct a transaction involving another security or commodity.

(True/False)

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Question 74

You own a stock that has risen from $10 per share to $32 per share.You wish to delay taking the profit but you are troubled about the short run behavior of the stock market.An effective action on your part would be to

(Multiple Choice)

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Question 75

A buyer of the call option is speculating on the

(Multiple Choice)

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Question 76

If an investor wants to acquire the right to buy or sell an asset,but not the obligation to do it,the best instrument is an option rather than a futures contract.

(True/False)

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Question 77

Which of the following statements are true?

(Multiple Choice)

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Question 78

Which of the following statements is true?

(Multiple Choice)

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Question 79

Exhibit 20.7 Use the Information Below for the Following Problem(S) The current stock price of Zanco Corporation is $50. Zanco Corporation has the following put and call option prices with exercise prices at $45 and $50. Exprcisp Price Put Price Call Price \ 45 \ 1.50 \ 6.75 \ 50 \ 3.75 \ 4.25 -Refer to Exhibit 20.7.The time premium for the call option with a $50 exercise price is

(Multiple Choice)

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Question 80

Showing 61 - 80 of 109

Exam 20: An Introduction to Derivative Markets and Securities

Datacorp stock currently trades at $50.August call options on the stock with a strike price of $55 are priced at $5.75.October call options with a strike price of $55 are priced at $6.25.Calculate the value of the time premium between the August and October options.

A stock currently sells for $75 per share.A put option on the stock with an exercise price $70 currently sells for $0.50.The put option is

Futures differ from forward contracts because

The minimum value of an option is zero.

The value of a call option just prior to expiration is (where V is the underlying asset's market price and X is the option's exercise price)

A call option in which the stock price is higher than the exercise price is said to be

The derivative based strategy known as portfolio insurance involves

Assume that you purchased shares of a stock at a price of $35 per share.At this time you wrote a call option with a $35 strike and received a call price of $2.The stock currently trades at $70.Calculate the dollar return on this option strategy.

A one year call option has a strike price of 50,expires in 6 months,and has a price of $5.04.If the risk free rate is 5%,and the current stock price is $50,what should the corresponding put be worth?

The option premium is the price the call buyer will pay to the option seller if the option is exercised.

A stock currently trades at $110.June call options on the stock with a strike price of $105 are priced at $4.Calculate the arbitrage profit that you can earn.

A forward contract gives its holder the option to conduct a transaction involving another security or commodity.

You own a stock that has risen from $10 per share to $32 per share.You wish to delay taking the profit but you are troubled about the short run behavior of the stock market.An effective action on your part would be to

A buyer of the call option is speculating on the

If an investor wants to acquire the right to buy or sell an asset,but not the obligation to do it,the best instrument is an option rather than a futures contract.

Which of the following statements are true?

Which of the following statements is true?

An Overview of the Investment Process

The Asset Allocation Decision

The Global Market Investment Decision

Securities Markets: Organization and Operation

Security-Market Indexes

Efficient Capital Markets

An Introduction to Portfolio Management

An Introduction to Asset Pricing Models

Multifactor Models of Risk and Return

Analysis of Financial Statements

Security Valuation Principles

Macroanalysis and Microvaluation of the Stock Market

Industry Analysis

Company Analysis and Stock Valuation

Equity Portfolio Management Stragtegies

Technical Analysis

Bond Fundamentals

The Analysis and Valuation of Bonds

Bond Portfolio Management Strategies

Forward and Futures Contracts

Option Contracts

Swap Contracts,convertible Securities,and Other Embedded Derivatives

Professional Money Management, alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

Investment Return and Risk Analysis Questions

Investment and Retirement Plans

Calculating Covariance and Correlation Coefficient of Assets

Portfolio Variance and Stock Weight Calculations

Portfolio Optimization with Negative Correlation: Finding Minimum Variance and Weight Allocation

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