Question 1

Use these option quotes to answer this question:
 
-You want the right,but not the obligation,to sell 400 shares of ZZ Industries stock at a price of $32.50 a share.How much will it cost you to establish this option position?

Accepted Answer

A)  $3.50 
B)  $4.00 
C)  $3.60 
D)  $3.78 
E)  $3.82

Question 2

The amount of money per share that will be received when a put option on stock is exercised is called the ________ price.

Accepted Answer

A)  market 
B)  stock 
C)  strike 
D)  future 
E)  obligated

Question 3

Use the following soybean futures quotes to answer this question:
 
-Julie was lucky enough to purchase two September 08 futures contracts on soybeans when the contracts were at the lowest price of the day.What is Julie's total profit or loss as of the end of the day?

Accepted Answer

A)  $25.00 
B)  $50.00 
C)  $60.00 
D)  $250.00 
E)  $260.00

Question 4

Money market instruments:

Accepted Answer

A)  tend to be illiquid. 
B)  are generally sold in small denominations. 
C)  cannot be resold. 
D)  may be sold on a discount basis. 
E)  are quoted in terms of a spread.

Question 5

Which of the following are generally included in a standardized futures contract?
I.delivery date
II.quantity to be delivered
III.specific item to be delivered
IV.delivery location

Accepted Answer

A)  I and II only 
B)  I, II, and III only 
C)  II, III, and IV only 
D)  I, III, and IV only 
E)  I, II, III, and IV

Question 6

When a put option is exercised,the:

Accepted Answer

A)  seller of the option receives the strike price. 
B)  seller of the option receives the option premium. 
C)  buyer of the option sells the underlying asset and receives the option premium. 
D)  buyer of the option pays the option premium and receives the underlying asset. 
E)  seller of the option must buy the underlying asset and pay the strike price.

Question 7

Use the following bond quotes to answer this question:
 
-What was yesterday's closing price on the Beta Movers bond?

Accepted Answer

A)  $1,020.13 
B)  $1,033.44 
C)  $1,044.07 
D)  $1,053.54 
E)  $1,054.07

Question 8

Great Lakes Farm agreed this morning to sell General Mills 25,000 bushels of wheat six months from now at a price per bushel of $9.75.This is an example of a:

Accepted Answer

A)  call option. 
B)  put option. 
C)  futures contract. 
D)  money market security. 
E)  fixed-income security.

Question 9

Use these option quotes to answer this question:
 
-The 47.50 put on a stock is trading at 1.32 bid and 1.37 ask.To buy one option contract,you must pay ________ at the time the contract is purchased.

Accepted Answer

A)  $1.32 
B)  $132.00 
C)  $137.00 
D)  $4,613.00 
E)  $4,882.00

Question 10

You purchased 500 shares of SLG,Inc.stock at a price of $43.70 a share.You then purchased put options on your shares with a strike price of $40.00 and an option premium of $0.90.At expiration,the stock was selling for $47.80 a share.You sold your shares on the option expiration date.What is your net profit or loss your transactions related to SLG,Inc.stock?

Accepted Answer

A)  $1,650 
B)  $1,250 
C)  $1,600 
D)  $2,150 
E)  $2,300

Question 11

Use the following stock quotes to answer this question:
 
-What is the current yield on Buy Rite stock?

Accepted Answer

A)  1.38 percent 
B)  2.60 percent 
C)  3.55 percent 
D)  4.25 percent 
E)  5.20 percent

Question 12

Use these option quotes to answer this question:
 
-You own 700 shares of ZZ Industries stock which you purchased for $38.40 a share.You would like to have the right to sell your shares for $35.00 a share.What will be the cost to obtain this right?

Accepted Answer

A)  $0.40 
B)  $0.90 
C)  $7.00 
D)  $476.00 
E)  $900.00

Question 13

Use these option quotes to answer this question:
 
-What price will you receive (per underlying share)if you sell the 47.50 call option on JL stock?

Accepted Answer

A)  $4.80 
B)  $5.00 
C)  $5.90 
D)  $6.00 
E)  $6.10

Question 14

You purchased six put option contracts with a strike price of $30 and a premium of $0.90.At expiration,the stock was selling for $26.80 a share.What is the total net amount you received for your shares,assuming that you disposed of your shares on the expiration date?

Accepted Answer

A)  $17,955 
B)  $17,460 
C)  $17,045 
D)  $17,815 
E)  $17,160

Question 15

Use the following bond quotes to answer this question:
 
-The Zeus Company bond pays interest semi-annually.You own six of these bonds.What is the amount you will receive as your next interest payment?

Accepted Answer

A)  $76.00 
B)  $228.00 
C)  $190.00 
D)  $247.50 
E)  $304.00

Question 16

Which one of the following is classified as a fixed-income security?

Accepted Answer

A)  U.S. Treasury bill 
B)  6-month municipal bond 
C)  common stock that pays regular quarterly dividends 
D)  2-year U.S. Treasury security 
E)  9-month bank certificate of deposit

Question 17

You purchased three call option contracts with a strike price of $22.50 and an option premium of $0.45.You held the option until the expiration date.On the expiration date,the stock was selling for $21.70 a share.What is the total profit or loss on your option position?

Accepted Answer

A)  -$45 
B)  $0 
C)  -$240 
D)  -$120 
E)  -$135

Question 18

Which one of the following sentences is correct concerning fixed-income securities?

Accepted Answer

A)  The coupon rate on a fixed-income security is equal to the current yield. 
B)  The price of a fixed-income security is inversely related to the current yield. 
C)  Fixed-income securities are default free. 
D)  Fixed-income securities tend to be more liquid than money market securities. 
E)  Fixed-income securities include all debt instruments issued by the U.S. government.

Question 19

Assume a semi-annual coupon bond matures in 3 years,has a face value of $1,000,a current market price of $989,and a 5 percent coupon.Which one of the following statements is correct concerning this bond?

Accepted Answer

A)  The current coupon rate is greater than 5 percent. 
B)  The bond is a money market instrument. 
C)  The bond will pay less annual interest now than when it was originally issued. 
D)  The current yield exceeds the coupon rate. 
E)  The bond will pay semi-annual payments of $50 each.

Question 20

Use these option quotes to answer this question:
 
-You purchased four call option contracts with a strike price of $40 and an option premium of $1.25.You closed your contract on the expiration date when the stock was selling for $42.50 a share.What is your total profit or loss on your option position?

Accepted Answer

A)  -$50 
B)  -$10 
C)  $135 
D)  $385 
E)  $500

Exam 3: Overview of Security Types

Use these option quotes to answer this question: -You want the right,but not the obligation,to sell 400 shares of ZZ Industries stock at a price of $32.50 a share.How much will it cost you to establish this option position?

The amount of money per share that will be received when a put option on stock is exercised is called the ________ price.

Use the following soybean futures quotes to answer this question: -Julie was lucky enough to purchase two September 08 futures contracts on soybeans when the contracts were at the lowest price of the day.What is Julie's total profit or loss as of the end of the day?

Money market instruments:

Which of the following are generally included in a standardized futures contract? I.delivery date II.quantity to be delivered III.specific item to be delivered IV.delivery location

When a put option is exercised,the:

Use the following bond quotes to answer this question: -What was yesterday's closing price on the Beta Movers bond?

Great Lakes Farm agreed this morning to sell General Mills 25,000 bushels of wheat six months from now at a price per bushel of $9.75.This is an example of a:

Use these option quotes to answer this question: -The 47.50 put on a stock is trading at 1.32 bid and 1.37 ask.To buy one option contract,you must pay ________ at the time the contract is purchased.

Use the following stock quotes to answer this question: -What is the current yield on Buy Rite stock?

Use these option quotes to answer this question: -You own 700 shares of ZZ Industries stock which you purchased for $38.40 a share.You would like to have the right to sell your shares for $35.00 a share.What will be the cost to obtain this right?

Use these option quotes to answer this question: -What price will you receive (per underlying share) if you sell the 47.50 call option on JL stock?

You purchased six put option contracts with a strike price of $30 and a premium of $0.90.At expiration,the stock was selling for $26.80 a share.What is the total net amount you received for your shares,assuming that you disposed of your shares on the expiration date?

Use the following bond quotes to answer this question: -The Zeus Company bond pays interest semi-annually.You own six of these bonds.What is the amount you will receive as your next interest payment?

Which one of the following is classified as a fixed-income security?

You purchased three call option contracts with a strike price of $22.50 and an option premium of $0.45.You held the option until the expiration date.On the expiration date,the stock was selling for $21.70 a share.What is the total profit or loss on your option position?

Which one of the following sentences is correct concerning fixed-income securities?

Assume a semi-annual coupon bond matures in 3 years,has a face value of $1,000,a current market price of $989,and a 5 percent coupon.Which one of the following statements is correct concerning this bond?