Question 1

If the initial margin is $5,000,the maintenance margin is $3,500 and your balance is $4,000,how much must you deposit?

Accepted Answer

A) nothing 
B) $6,000 
C) $1,500 
D) $9,000 
E) none of the above 
A) nothing 
B) $6,000 
C) $1,500 
D) $9,000 
E) none of the above

Question 2

A hedge fund is a very risky form of investment.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

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

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

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Most investors close their positions by exercising their options.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

One party to a forward transaction does not bear the risk that the other party will default.

Accepted Answer

A) True 
 B)False

Question 10

When futures accounts are marked-to-market,an account balance below the maintenance margin must be brought up to the initial margin.

Accepted Answer

A) True 
 B)False

Question 11

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 12

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

Accepted Answer

A) True 
 B)False

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 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 15

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 16

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 17

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

Accepted Answer

A) True 
 B)False

Question 18

One of the advantages of forward markets is

Accepted Answer

A) performance is guaranteed by the G-30 
B) trading is less costly and governed by more rules 
C) none of the above 
D) trading is conducted in the evening over computers 
E) the contracts are private and customized 
A) performance is guaranteed by the G-30 
B) trading is less costly and governed by more rules 
C) none of the above 
D) trading is conducted in the evening over computers 
E) the contracts are private and customized

Question 19

Which of the following duties is not performed by the clearinghouse?

Accepted Answer

A) holding margin deposits 
B) guaranteeing performance of buyer and writer 
C) maintaining records of transactions 
D) lending money to meet margin requirements 
E) none of the above 
A) holding margin deposits 
B) guaranteeing performance of buyer and writer 
C) maintaining records of transactions 
D) lending money to meet margin requirements 
E) none of the above

Question 20

All of the following are forms of options except

Accepted Answer

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

If the initial margin is $5,000,the maintenance margin is $3,500 and your balance is $4,000,how much must you deposit?

A hedge fund is a very risky form of investment.

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

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

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

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

Most investors close their positions by exercising their options.

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

One party to a forward transaction does not bear the risk that the other party will default.

When futures accounts are marked-to-market,an account balance below the maintenance margin must be brought up to the initial margin.

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.

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

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

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

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

A writer selected to exercise an option is said to be

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

One of the advantages of forward markets is

Which of the following duties is not performed by the clearinghouse?

All of the following are forms of options 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

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

If the initial margin is $5,000,the maintenance margin is $3,500 and your balance is $4,000,how much must you deposit?

A hedge fund is a very risky form of investment.

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

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

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

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

Most investors close their positions by exercising their options.

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

One party to a forward transaction does not bear the risk that the other party will default.

When futures accounts are marked-to-market,an account balance below the maintenance margin must be brought up to the initial margin.

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.

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

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

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

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

A writer selected to exercise an option is said to be

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

One of the advantages of forward markets is

Which of the following duties is not performed by the clearinghouse?

All of the following are forms of options 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

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