Exam 17: Advanced Issues in Options

A _ option could be used to pay back the initial premium where the price falls __________,in which case the option is sometimes called a money back option.

(Multiple Choice)

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Question 21

Currency options are generally -traded options.

(Multiple Choice)

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Question 22

Unsecured notes issued by companies where the holder receives periodic coupon payments and an option to change the note into ordinary shares at a ratio which is pre-specified and remains constant over the life of the note are known as:

(Multiple Choice)

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Question 23

One way in which LEPOs are identical to standard options is that there is only one option for each exercise price.

(True/False)

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Question 24

options can be used to control interest rate risk. allows borrowers to set a maximum interest rate,while . allows investors to set a minimum interest rate earned on their investment

(Multiple Choice)

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Question 25

Which of the following provides insurance to a portfolio manager against declines in value without limiting the increase in portfolio value?

(Multiple Choice)

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Question 26

Given a LEPO price of $0.01,a share price of $5,time to expiry of six months,a risk-free rate of 5% p.a.and a dividend present value of $0.25,what is the value the LEPO?

(Multiple Choice)

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Question 27

With forward start options the following applies:

(Multiple Choice)

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Question 28

In an issue of third-party warrants,the issuer is usually:

(Multiple Choice)

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Question 29

The key difference between a call option written on the USD cost of the AUD and a put option written on the AUD cost of the USD is the standard deviation estimate.

(True/False)

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Question 30

Which of the following are features of LEPOs?

(Multiple Choice)

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Question 31

Options written on the 90-day bank bill contract have:

(Multiple Choice)

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Question 32

A convertible note is a security that is initially issued as equity,but can later be converted into a debt security.

(True/False)

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Question 33

Convertible notes typically have a window for conversion that is unlimited.

(True/False)

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Question 34

Which of the following about CDS is correct?

(Multiple Choice)

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Question 35

You have $1250 000 invested in a property index,which has a current value of 9000.0.If a put option is available with an exercise price of 11500,standard deviation of returns is 40%,time to maturity is 9 months and risk-free rate is 8% p.a. ,how many contracts are required for an exact hedge of this index? Assume an index point value of $10.00.

(Multiple Choice)

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Question 36

The term to maturity of company-issued warrants tends to be greater than that of standard exchange-traded options.

(True/False)

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Question 37

Suppose the LEPO has an exercise price of one cent,the share price of the underlying share is currently $13.25,the time to expiry is two months,the risk-free rate is 5.0% p.a.and the present value of the dividend is $0.84.What would be the price of this LEPO?

(Multiple Choice)

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Question 38

The Garman Kohlhagen (1983)model may be used to price an European-type option where:

(Multiple Choice)

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Question 39

The exercise value of a __________ option is determined by the maximum or minimum price of the underlying asset reached during the life of an option and the expiry price of the asset.

(Multiple Choice)

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Question 40

Showing 21 - 40 of 40

A _ option could be used to pay back the initial premium where the price falls __________,in which case the option is sometimes called a money back option.

Currency options are generally -traded options.

Unsecured notes issued by companies where the holder receives periodic coupon payments and an option to change the note into ordinary shares at a ratio which is pre-specified and remains constant over the life of the note are known as:

One way in which LEPOs are identical to standard options is that there is only one option for each exercise price.

options can be used to control interest rate risk. allows borrowers to set a maximum interest rate,while . allows investors to set a minimum interest rate earned on their investment

Which of the following provides insurance to a portfolio manager against declines in value without limiting the increase in portfolio value?

Given a LEPO price of $0.01,a share price of $5,time to expiry of six months,a risk-free rate of 5% p.a.and a dividend present value of $0.25,what is the value the LEPO?

With forward start options the following applies:

In an issue of third-party warrants,the issuer is usually:

The key difference between a call option written on the USD cost of the AUD and a put option written on the AUD cost of the USD is the standard deviation estimate.

Which of the following are features of LEPOs?

Options written on the 90-day bank bill contract have:

A convertible note is a security that is initially issued as equity,but can later be converted into a debt security.

Convertible notes typically have a window for conversion that is unlimited.

Which of the following about CDS is correct?

The term to maturity of company-issued warrants tends to be greater than that of standard exchange-traded options.

Suppose the LEPO has an exercise price of one cent,the share price of the underlying share is currently $13.25,the time to expiry is two months,the risk-free rate is 5.0% p.a.and the present value of the dividend is $0.84.What would be the price of this LEPO?

The Garman Kohlhagen (1983)model may be used to price an European-type option where:

The exercise value of a __________ option is determined by the maximum or minimum price of the underlying asset reached during the life of an option and the expiry price of the asset.

The Investment Decision

Australian Financial Markets

The International Investment Environment

Financial Management: Derivative Instruments and Information Sources

Money Market Securities

Bonds

Investor Preferences and Portfolio Concepts

Risky Asset Pricing Models and the Capm

Alternative Risky Asset Pricing Models

Concepts and Applications of Market Efficiency

Equity Valuation Models

Macro- and Industry Analysis of Share Markets

Qualitative Stock Selection

Quantitative Company Analysis

Futures and Forward Contracts

Option Contracts

Alternative Investments

Portfolio Management

Performance Evaluation of Managed Funds

Filters

Exam 17: Advanced Issues in Options

A ___________ option could be used to pay back the initial premium where the price falls ____________________,in which case the option is sometimes called a money back option.

Currency options are generally __________-traded __________ options.

Unsecured notes issued by companies where the holder receives periodic coupon payments and an option to change the note into ordinary shares at a ratio which is pre-specified and remains constant over the life of the note are known as:

One way in which LEPOs are identical to standard options is that there is only one option for each exercise price.

options can be used to control interest rate risk. allows borrowers to set a maximum interest rate,while . allows investors to set a minimum interest rate earned on their investment

Which of the following provides insurance to a portfolio manager against declines in value without limiting the increase in portfolio value?

Given a LEPO price of $0.01,a share price of $5,time to expiry of six months,a risk-free rate of 5% p.a.and a dividend present value of $0.25,what is the value the LEPO?

With forward start options the following applies:

In an issue of third-party warrants,the issuer is usually:

The key difference between a call option written on the USD cost of the AUD and a put option written on the AUD cost of the USD is the standard deviation estimate.

Which of the following are features of LEPOs?

Options written on the 90-day bank bill contract have:

A convertible note is a security that is initially issued as equity,but can later be converted into a debt security.

Convertible notes typically have a window for conversion that is unlimited.

Which of the following about CDS is correct?

The term to maturity of company-issued warrants tends to be greater than that of standard exchange-traded options.

Suppose the LEPO has an exercise price of one cent,the share price of the underlying share is currently $13.25,the time to expiry is two months,the risk-free rate is 5.0% p.a.and the present value of the dividend is $0.84.What would be the price of this LEPO?

The Garman Kohlhagen (1983)model may be used to price an European-type option where:

The exercise value of a __________ option is determined by the maximum or minimum price of the underlying asset reached during the life of an option and the expiry price of the asset.

The Investment Decision

Australian Financial Markets

The International Investment Environment

Financial Management: Derivative Instruments and Information Sources

Money Market Securities

Bonds

Investor Preferences and Portfolio Concepts

Risky Asset Pricing Models and the Capm

Alternative Risky Asset Pricing Models

Concepts and Applications of Market Efficiency

Equity Valuation Models

Macro- and Industry Analysis of Share Markets

Qualitative Stock Selection

Quantitative Company Analysis

Futures and Forward Contracts

Option Contracts

Alternative Investments

Portfolio Management

Performance Evaluation of Managed Funds

Filters

A _ option could be used to pay back the initial premium where the price falls __________,in which case the option is sometimes called a money back option.

Currency options are generally -traded options.