Question 1

An order placed by an investor for the broker to buy an option at the best available price is called a market order.

Accepted Answer

A) True 
 B)False

Question 2

Over-the-counter options are not subject to default.

Accepted Answer

A) True 
 B)False

Question 3

In which city did organized option markets originate?

Accepted Answer

A)  New York 
B)  Chicago 
C)  Philadelphia 
D)  San Francisco 
E)  none of the above 
A)  New York 
B)  Chicago 
C)  Philadelphia 
D)  San Francisco 
E)  none of the above

Question 4

Option commissions are set by the Chicago Board Options Exchange.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is a legitimate type of option order on the exchange?

Accepted Answer

A)  purchase order 
B)  limit order 
C)  execution order 
D)  floor order 
E)  all of the above 
A)  purchase order 
B)  limit order 
C)  execution order 
D)  floor order 
E)  all of the above

Question 6

What intermediary guarantees an option writer's performance?

Accepted Answer

A)  credit worthiness rating company 
B)  brokerage 
C)  good-till-canceled order 
D)  clearinghouse 
E)  none of the above 
A)  credit worthiness rating company 
B)  brokerage 
C)  good-till-canceled order 
D)  clearinghouse 
E)  none of the above

Question 7

The Put and Call Brokers and Dealers Association created the first organized options exchange.

Accepted Answer

A) True 
 B)False

Question 8

Which one of the following is not a type of transaction cost in options trading?

Accepted Answer

A)  the bid-ask spread 
B)  the commission 
C)  clearing fees 
D)  the cost of obtaining a quote 
E)  all of the above 
A)  the bid-ask spread 
B)  the commission 
C)  clearing fees 
D)  the cost of obtaining a quote 
E)  all of the above

Question 9

A put option in which the stock price is $60 and the exercise price is $65 is said to be

Accepted Answer

A)  in-the-money 
B)  out-of-the-money 
C)  at-the-money 
D)  exercisable 
E)  none of the above 
A)  in-the-money 
B)  out-of-the-money 
C)  at-the-money 
D)  exercisable 
E)  none of the above

Question 10

Exchange-listed options expire on the Saturday following the third Friday of the month.

Accepted Answer

A) True 
 B)False

Question 11

The over-the-counter options market is much larger than the exchange-listed options market.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following are long-term options?

Accepted Answer

A)  Bond options 
B)  LEAPS 
C)  currency options 
D)  Nikkei put warrants 
E)  none of the above 
A)  Bond options 
B)  LEAPS 
C)  currency options 
D)  Nikkei put warrants 
E)  none of the above

Question 13

Exercise prices are set in $5 increments for options on exchanges.

Accepted Answer

A) True 
 B)False

Question 14

An investor who owns a call option can close out the position by any of the following types of transactions except

Accepted Answer

A)  exercise 
B)  offset 
C)  expiring out-of-the-money 
D)  buying a put 
E)  none of the above 
A)  exercise 
B)  offset 
C)  expiring out-of-the-money 
D)  buying a put 
E)  none of the above

Question 15

The order book official executes limit order option trades for the general public.

Accepted Answer

A) True 
 B)False

Question 16

An investor who is long an over-the-counter call option is exposed to the risk that the call writer will default on her obligations should the call option end up in-the-money.

Accepted Answer

A) True 
 B)False

Question 17

Options traders who hold their positions for very short periods of time are called position traders.

Accepted Answer

A) True 
 B)False

Question 18

Index options have less volume than stock options.

Accepted Answer

A) True 
 B)False

Question 19

Which type of trader legitimately practices dual trading?

Accepted Answer

A)  floor brokers 
B)  off-floor option traders 
C)  board brokers 
D)  designated primary market makers 
E)  none of the above 
A)  floor brokers 
B)  off-floor option traders 
C)  board brokers 
D)  designated primary market makers 
E)  none of the above

Question 20

The majority of options exchanges in the U.S. are fully automated.

Accepted Answer

A) True 
 B)False

An order placed by an investor for the broker to buy an option at the best available price is called a market order.

Over-the-counter options are not subject to default.

In which city did organized option markets originate?

Option commissions are set by the Chicago Board Options Exchange.

Which of the following is a legitimate type of option order on the exchange?

What intermediary guarantees an option writer's performance?

The Put and Call Brokers and Dealers Association created the first organized options exchange.

Which one of the following is not a type of transaction cost in options trading?

A put option in which the stock price is $60 and the exercise price is $65 is said to be

Exchange-listed options expire on the Saturday following the third Friday of the month.

The over-the-counter options market is much larger than the exchange-listed options market.

Which of the following are long-term options?

Exercise prices are set in $5 increments for options on exchanges.

An investor who owns a call option can close out the position by any of the following types of transactions except

The order book official executes limit order option trades for the general public.

An investor who is long an over-the-counter call option is exposed to the risk that the call writer will default on her obligations should the call option end up in-the-money.

Options traders who hold their positions for very short periods of time are called position traders.

Index options have less volume than stock options.

Which type of trader legitimately practices dual trading?

The majority of options exchanges in the U.S. are fully automated.

Introduction

Principles of Option Pricing

Option Pricing Models: The Binomial Model

Option Pricing Models: The Black-Scholes-Merton Model

Basic Option Strategies

Advanced Option Strategies

Structure of Forward and Futures Markets

Principles of Pricing Forwards, Futures and Options on Futures

Futures Arbitrage Strategies

Forward and Futures Hedging, Spread, and Target Strategies

Swaps

Interest Rate Forwards and Options

Advanced Derivatives and Strategies

Financial Risk Management Techniques and Appplications

Managing Risk in an Organization

Filters

Exam 2: Structure of Options Markets

An order placed by an investor for the broker to buy an option at the best available price is called a market order.

Over-the-counter options are not subject to default.

In which city did organized option markets originate?

Option commissions are set by the Chicago Board Options Exchange.

Which of the following is a legitimate type of option order on the exchange?

What intermediary guarantees an option writer's performance?

The Put and Call Brokers and Dealers Association created the first organized options exchange.

Which one of the following is not a type of transaction cost in options trading?

A put option in which the stock price is $60 and the exercise price is $65 is said to be

Exchange-listed options expire on the Saturday following the third Friday of the month.

The over-the-counter options market is much larger than the exchange-listed options market.

Which of the following are long-term options?

Exercise prices are set in $5 increments for options on exchanges.

An investor who owns a call option can close out the position by any of the following types of transactions except

The order book official executes limit order option trades for the general public.

An investor who is long an over-the-counter call option is exposed to the risk that the call writer will default on her obligations should the call option end up in-the-money.

Options traders who hold their positions for very short periods of time are called position traders.

Index options have less volume than stock options.

Which type of trader legitimately practices dual trading?

The majority of options exchanges in the U.S. are fully automated.

Introduction

Principles of Option Pricing

Option Pricing Models: The Binomial Model

Option Pricing Models: The Black-Scholes-Merton Model

Basic Option Strategies

Advanced Option Strategies

Structure of Forward and Futures Markets

Principles of Pricing Forwards, Futures and Options on Futures

Futures Arbitrage Strategies

Forward and Futures Hedging, Spread, and Target Strategies

Swaps

Interest Rate Forwards and Options

Advanced Derivatives and Strategies

Financial Risk Management Techniques and Appplications

Managing Risk in an Organization

Filters