Question 1

Over-the-counter options dealers do not have to be members of an options exchange.

Accepted Answer

A) True 
 B)False

Question 2

CBOE option market makers are also called liquidity providers.

Accepted Answer

A) True 
 B)False

Question 3

The exercise price can be set at any desired level on each of the following types of options except

Accepted Answer

A)  FLEX options 
B)  equity options 
C)  over-the-counter options 
D)  all of the above 
E)  none of the above 
A)  FLEX options 
B)  equity options 
C)  over-the-counter options 
D)  all of the above 
E)  none of the above

Question 4

The number of option contracts outstanding at any given time is called the open interest.

Accepted Answer

A) True 
 B)False

Question 5

Who determines whether options on a company's stock will be listed?

Accepted Answer

A)  the clearing house 
B)  Securities Exchange Commission 
C)  the company 
D)  the exchange 
E)  none of the above 
A)  the clearing house 
B)  Securities Exchange Commission 
C)  the company 
D)  the exchange 
E)  none of the above

Question 6

A writer selected to exercise an option is said to be

Accepted Answer

A)  marginal 
B)  assigned 
C)  restricted 
D)  designated 
E)  none of the above 
A)  marginal 
B)  assigned 
C)  restricted 
D)  designated 
E)  none of the above

Question 7

Indices measuring options market activity are simple to construct and widely quoted.

Accepted Answer

A) True 
 B)False

Question 8

The Options Clearing Corporation guarantees the obligations of traders on options exchanges.

Accepted Answer

A) True 
 B)False

Question 9

Index options trading on organized exchanges expire according to which of the following cycles?

Accepted Answer

A)  March, June, September, and December 
B)  each of the next four consecutive months 
C)  the current month, the next month, and the next two months in one of the other cycles 
D)  every other month for each of the next nine months 
E)  none of the above 
A)  March, June, September, and December 
B)  each of the next four consecutive months 
C)  the current month, the next month, and the next two months in one of the other cycles 
D)  every other month for each of the next nine months 
E)  none of the above

Question 10

Organized options markets are different from over-the-counter options markets for all of the following reasons except

Accepted Answer

A)  exercise terms 
B)  physical trading floor 
C)  regulation 
D)  standardized contracts 
E)  credit risk 
A)  exercise terms 
B)  physical trading floor 
C)  regulation 
D)  standardized contracts 
E)  credit risk

Question 11

This individual maintains and attempts to fill public option orders but does not disclose them to others.

Accepted Answer

A)  liquidity provider 
B)  board broker 
C)  order book official 
D)  registered option trader 
E)  none of the above 
A)  liquidity provider 
B)  board broker 
C)  order book official 
D)  registered option trader 
E)  none of the above

Question 12

"Wal-Mart calls" are an example of

Accepted Answer

A)  an option series 
B)  an option class 
C)  an option grade 
D)  a and b 
E)  none of the above 
A)  an option series 
B)  an option class 
C)  an option grade 
D)  a and b 
E)  none of the above

Question 13

The spread between the bid price and the ask price is a transaction cost to the option trader.

Accepted Answer

A) True 
 B)False

Question 14

A call option to buy euros expressed in $/€ is equivalent to a put option to sell dollars expressed in €/$.

Accepted Answer

A) True 
 B)False

Question 15

Exercising a stock put option means the put seller must sell stock at the stated strike price.

Accepted Answer

A) True 
 B)False

Question 16

The advantages of the over-the-counter options market include all of the following except

Accepted Answer

A)  customized contracts 
B)  privately executed 
C)  freedom from government regulation 
D)  lower prices 
E)  none of the above 
A)  customized contracts 
B)  privately executed 
C)  freedom from government regulation 
D)  lower prices 
E)  none of the above

Question 17

An out-of-the-money call option has an exercise price less than the stock price.

Accepted Answer

A) True 
 B)False

Question 18

The total number of long option contracts outstanding at any given time is called the

Accepted Answer

A)  market cap 
B)  sum options outstanding (SOO) 
C)  option wealth outstanding (OWO) 
D)  open interest 
E)  none of the above 
A)  market cap 
B)  sum options outstanding (SOO) 
C)  option wealth outstanding (OWO) 
D)  open interest 
E)  none of the above

Question 19

On the CBOE, option tables represent each option with a series of letters and number, such as, MSFT\12B17\20.0. The last number represents the calendar date, the 20th of the month in this example.

Accepted Answer

A) True 
 B)False

Question 20

If the market maker will buy at 4 and sell at 4.50, the bid-ask spread is

Accepted Answer

A)  8.50 
B)  4.25 
C)  0.50 
D)  4.00 
E)  none of the above 
A)  8.50 
B)  4.25 
C)  0.50 
D)  4.00 
E)  none of the above

Over-the-counter options dealers do not have to be members of an options exchange.

CBOE option market makers are also called liquidity providers.

The exercise price can be set at any desired level on each of the following types of options except

The number of option contracts outstanding at any given time is called the open interest.

Who determines whether options on a company's stock will be listed?

A writer selected to exercise an option is said to be

Indices measuring options market activity are simple to construct and widely quoted.

The Options Clearing Corporation guarantees the obligations of traders on options exchanges.

Index options trading on organized exchanges expire according to which of the following cycles?

Organized options markets are different from over-the-counter options markets for all of the following reasons except

This individual maintains and attempts to fill public option orders but does not disclose them to others.

"Wal-Mart calls" are an example of

The spread between the bid price and the ask price is a transaction cost to the option trader.

A call option to buy euros expressed in $/€ is equivalent to a put option to sell dollars expressed in €/$.

Exercising a stock put option means the put seller must sell stock at the stated strike price.

The advantages of the over-the-counter options market include all of the following except

An out-of-the-money call option has an exercise price less than the stock price.

The total number of long option contracts outstanding at any given time is called the

On the CBOE, option tables represent each option with a series of letters and number, such as, MSFT\12B17\20.0. The last number represents the calendar date, the 20^th of the month in this example.

If the market maker will buy at 4 and sell at 4.50, the bid-ask spread is

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

Over-the-counter options dealers do not have to be members of an options exchange.

CBOE option market makers are also called liquidity providers.

The exercise price can be set at any desired level on each of the following types of options except

The number of option contracts outstanding at any given time is called the open interest.

Who determines whether options on a company's stock will be listed?

A writer selected to exercise an option is said to be

Indices measuring options market activity are simple to construct and widely quoted.

The Options Clearing Corporation guarantees the obligations of traders on options exchanges.

Index options trading on organized exchanges expire according to which of the following cycles?

Organized options markets are different from over-the-counter options markets for all of the following reasons except

This individual maintains and attempts to fill public option orders but does not disclose them to others.

"Wal-Mart calls" are an example of

The spread between the bid price and the ask price is a transaction cost to the option trader.

A call option to buy euros expressed in $/€ is equivalent to a put option to sell dollars expressed in €/$.

Exercising a stock put option means the put seller must sell stock at the stated strike price.

The advantages of the over-the-counter options market include all of the following except

An out-of-the-money call option has an exercise price less than the stock price.

The total number of long option contracts outstanding at any given time is called the

On the CBOE, option tables represent each option with a series of letters and number, such as, MSFT\12B17\20.0. The last number represents the calendar date, the 20th of the month in this example.

If the market maker will buy at 4 and sell at 4.50, the bid-ask spread is

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

On the CBOE, option tables represent each option with a series of letters and number, such as, MSFT\12B17\20.0. The last number represents the calendar date, the 20^th of the month in this example.