Exam 13: An Introduction to Derivative Markets and Securities

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Exhibit 13-5 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) Sarah Kling bought a 6-month Peppy Cola put option with an exercise price of $55 for a premium of $8.25 when Peppy was selling for $48.00 per share. -Refer to Exhibit 13-5. What is Sarah's annualized gain/loss?

(Multiple Choice)

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Question 141

The buyer of a straddle expects stock prices to move strongly in either direction.

(True/False)

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Question 142

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 143

Which of the following statements is false?

(Multiple Choice)

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Question 144

Forward contracts are traded over-the-counter and are generally not standardized.

(True/False)

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Question 145

Assume that you purchased shares of a stock at a price of $35 per share. At this time you purchased a put option with a $35 strike price of $3. The stock currently trades at $40. Calculate the dollar return on this option strategy.

(Multiple Choice)

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Question 146

A call option is in the money if the current market price is above the strike price.

(True/False)

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Question 147

Investment costs are generally higher in the derivative markets than in the corresponding cash markets.

(True/False)

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Question 148

A currency call is like being ____ in the currency futures.

(Multiple Choice)

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Question 149

Showing 141 - 149 of 149

Exhibit 13-5 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) Sarah Kling bought a 6-month Peppy Cola put option with an exercise price of $55 for a premium of $8.25 when Peppy was selling for $48.00 per share. -Refer to Exhibit 13-5. What is Sarah's annualized gain/loss?

The buyer of a straddle expects stock prices to move strongly in either direction.

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

Which of the following statements is false?

Forward contracts are traded over-the-counter and are generally not standardized.

Assume that you purchased shares of a stock at a price of $35 per share. At this time you purchased a put option with a $35 strike price of $3. The stock currently trades at $40. Calculate the dollar return on this option strategy.

A call option is in the money if the current market price is above the strike price.

Investment costs are generally higher in the derivative markets than in the corresponding cash markets.

A currency call is like being ____ in the currency futures.

The Investment Setting

The Asset Allocation Decision

Selecting Investments in a Global Market

Securities Markets and the Economy

Efficient Capital Markets

An Introduction to Portfolio Management

Asset Pricing Models: Capm and Apt

Economic and Industry Analysis

Company Analysis and Stock Valuation

Technical Analysis

Bond Fundamentals

The Analysis and Valuation of Bonds

Derivatives: Analysis and Valuation

Equity Portfolio Management Strategies

Bond Portfolio Management Strategies

Professional Money Management, Alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

Analysis of Financial Statements

An Introduction to Security Valuation

Web Appendix: A Review of Statistics and the Security Market Line

Web Appendix: A Review of Statistics and the Security Market Line

Appendix: Objectives and Constraints of Institutional Investors

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