Question 1

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 2

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

Accepted Answer

A) True 
 B)False

Question 3

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 4

Exercise limits are restrictions on the number of options that can be exercised by an investor in a given day or series of days.

Accepted Answer

A) True 
 B)False

Question 5

Option traders incur which of the following types of costs?

Accepted Answer

A) margin requirements 
B) taxes 
C) stock trading commissions 
D) a and b 
E) a,b and c 
A) margin requirements 
B) taxes 
C) stock trading commissions 
D) a and b 
E) a,b and c

Question 6

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 7

The number of options acquired when one contract is purchased on an exchange is

Accepted Answer

A) 1 
B) 5 
C) 100 
D) 500 
E) 8,000 
A) 1 
B) 5 
C) 100 
D) 500 
E) 8,000

Question 8

The options market is regulated by the Securities Investor Protection Corporation.

Accepted Answer

A) True 
 B)False

Question 9

The AT&T October puts are an option series.

Accepted Answer

A) True 
 B)False

Question 10

Option commissions are set by the Chicago Board Options Exchange.

Accepted Answer

A) True 
 B)False

Question 11

The option price is also referred to as the

Accepted Answer

A) strike 
B) spread 
C) premium 
D) fee 
E) none of the above 
A) strike 
B) spread 
C) premium 
D) fee 
E) none of the above

Question 12

Options are traded on which of the following exchanges?

Accepted Answer

A) American Stock Exchange 
B) New York Stock Exchange Euronext (Arca) 
C) Chicago Board Options Exchange 
D) International Securities Exchange 
E) all of the above 
A) American Stock Exchange 
B) New York Stock Exchange Euronext (Arca) 
C) Chicago Board Options Exchange 
D) International Securities Exchange 
E) all of the above

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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 18

An order that specifies a maximum price to pay if buying is a

Accepted Answer

A) stop order 
B) market order 
C) limit order 
D) all or none order 
E) none of the above 
A) stop order 
B) market order 
C) limit order 
D) all or none order 
E) none of the above

Question 19

A market maker always avoids the cost of the bid-ask spread.

Accepted Answer

A) True 
 B)False

Question 20

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

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

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

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

Exercise limits are restrictions on the number of options that can be exercised by an investor in a given day or series of days.

Option traders incur which of the following types of costs?

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

The number of options acquired when one contract is purchased on an exchange is

The options market is regulated by the Securities Investor Protection Corporation.

The AT&T October puts are an option series.

Option commissions are set by the Chicago Board Options Exchange.

The option price is also referred to as the

Options are traded on which of the following exchanges?

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

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

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

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

Which of the following are long-term options?

An order that specifies a maximum price to pay if buying is a

A market maker always avoids the cost of the bid-ask spread.

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

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

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

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

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

Exercise limits are restrictions on the number of options that can be exercised by an investor in a given day or series of days.

Option traders incur which of the following types of costs?

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

The number of options acquired when one contract is purchased on an exchange is

The options market is regulated by the Securities Investor Protection Corporation.

The AT&T October puts are an option series.

Option commissions are set by the Chicago Board Options Exchange.

The option price is also referred to as the

Options are traded on which of the following exchanges?

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

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

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

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

Which of the following are long-term options?

An order that specifies a maximum price to pay if buying is a

A market maker always avoids the cost of the bid-ask spread.

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

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