Question 1

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 D

Question 2

The exercise price is also called the striking price.

Accepted Answer

A) True 
 B)False  True

Question 3

The exchange with the largest share of the options market is the

Accepted Answer

A) American Stock Exchange 
B) Boston Options Exchange 
C) Chicago Board Options Exchange 
D) Pacific Stock Exchange 
E) Philadelphia Stock Exchange 
A) American Stock Exchange 
B) Boston Options Exchange 
C) Chicago Board Options Exchange 
D) Pacific Stock Exchange 
E) Philadelphia Stock Exchange C

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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 7

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 8

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 9

All of the following are forms of options except

Accepted Answer

A) convertible bonds 
B) callable bonds 
C) warrants 
D) mutual funds 
E) none of the above 
A) convertible bonds 
B) callable bonds 
C) warrants 
D) mutual funds 
E) none of the above

Question 10

Index options have less volume than stock options.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Which of the following index options is the most widely traded?

Accepted Answer

A) S&P 500 
B) Nikkei 225 
C) Technology Index 
D) New York Stock Exchange Index 
E) none of the above 
A) S&P 500 
B) Nikkei 225 
C) Technology Index 
D) New York Stock Exchange Index 
E) none of the above

Question 13

All of the options on Microsoft comprise an option class.

Accepted Answer

A) True 
 B)False

Question 14

The bid price is the price paid to buy an option from a market maker.

Accepted Answer

A) True 
 B)False

Question 15

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 16

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

Question 17

AMEX option market makers are called specialists.

Accepted Answer

A) True 
 B)False

Question 18

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 19

What amount must a call writer pay if a cash-settled index call is exercised?

Accepted Answer

A) difference between the index level and the exercise price 
B) exercise price 
C) difference between the exercise price and the index level 
D) index level 
E) none of the above 
A) difference between the index level and the exercise price 
B) exercise price 
C) difference between the exercise price and the index level 
D) index level 
E) none of the above

Question 20

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

Which type of trader legitimately practices dual trading?

The exercise price is also called the striking price.

The exchange with the largest share of the options market is the

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

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

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

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

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

All of the following are forms of options except

Index options have less volume than stock options.

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

Which of the following index options is the most widely traded?

All of the options on Microsoft comprise an option class.

The bid price is the price paid to buy an option from a market maker.

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

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

AMEX option market makers are called specialists.

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

What amount must a call writer pay if a cash-settled index call is exercised?

In which city did organized option markets originate?

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

The 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 Applications

Managing Risk in an Organization

Filters

Exam 2: Structure of Options Markets

Which type of trader legitimately practices dual trading?

The exercise price is also called the striking price.

The exchange with the largest share of the options market is the

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

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

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

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

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

All of the following are forms of options except

Index options have less volume than stock options.

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

Which of the following index options is the most widely traded?

All of the options on Microsoft comprise an option class.

The bid price is the price paid to buy an option from a market maker.

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

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

AMEX option market makers are called specialists.

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

What amount must a call writer pay if a cash-settled index call is exercised?

In which city did organized option markets originate?

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

The 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 Applications

Managing Risk in an Organization

Filters