Question 1

An investor who exercises a call option on an index must

Accepted Answer

A) accept the cash difference between the index and the exercise price 
B) purchase all of the stocks in the index in their appropriate proportions from the writer 
C) immediately buy a put option to offset the call option 
D) immediately write another call option to offset 
E) none of the above 
A) accept the cash difference between the index and the exercise price 
B) purchase all of the stocks in the index in their appropriate proportions from the writer 
C) immediately buy a put option to offset the call option 
D) immediately write another call option to offset 
E) none of the above

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

A call option priced at $2 with a stock price of $30 and an exercise price of $35 allows the holder to buy the stock at

Accepted Answer

A) $2 
B) $32 
C) $33 
D) $35 
E) none of the above 
A) $2 
B) $32 
C) $33 
D) $35 
E) none of the above

Question 5

Offsetting an over-the-counter option contract cancels both contracts.

Accepted Answer

A) True 
 B)False

Question 6

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 7

A put option increases in value when the stock price decreases.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

A market maker is an options trader who buys and sells options off of the exchange floor.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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 14

Position limits are restrictions on the number of transactions an investor can execute on a given day.

Accepted Answer

A) True 
 B)False

Question 15

Most investors close their positions by exercising their options.

Accepted Answer

A) True 
 B)False

An investor who exercises a call option on an index must

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

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

A call option priced at $2 with a stock price of $30 and an exercise price of $35 allows the holder to buy the stock at

Offsetting an over-the-counter option contract cancels both contracts.

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

A put option increases in value when the stock price decreases.

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

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

A market maker is an options trader who buys and sells options off of the exchange floor.

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

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

A writer selected to exercise an option is said to be

Position limits are restrictions on the number of transactions an investor can execute on a given day.

Most investors close their positions by exercising their options.

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

An investor who exercises a call option on an index must

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

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

A call option priced at $2 with a stock price of $30 and an exercise price of $35 allows the holder to buy the stock at

Offsetting an over-the-counter option contract cancels both contracts.

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

A put option increases in value when the stock price decreases.

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

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

A market maker is an options trader who buys and sells options off of the exchange floor.

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

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

A writer selected to exercise an option is said to be

Position limits are restrictions on the number of transactions an investor can execute on a given day.

Most investors close their positions by exercising their options.

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