Question 1

Binary options

Accepted Answer

A)  are based on two possible outcomes-yes or no. 
B)  may make a payoff of a fixed amount if a specified event happens. 
C)  may make a payoff of a fixed amount if a specified event does not happen. 
D)  may make a payoff of a fixed amount if a specified event happens and are based on two possible outcomes-yes or no. 
E)  All of the options are correct. 
A)  are based on two possible outcomes-yes or no. 
B)  may make a payoff of a fixed amount if a specified event happens. 
C)  may make a payoff of a fixed amount if a specified event does not happen. 
D)  may make a payoff of a fixed amount if a specified event happens and are based on two possible outcomes-yes or no. 
E)  All of the options are correct.

Question 2

The price that the writer of a call option receives to sell the option is called the

Accepted Answer

A)  strike price. 
B)  exercise price. 
C)  execution price. 
D)  acquisition price. 
E)  premium. 
A)  strike price. 
B)  exercise price. 
C)  execution price. 
D)  acquisition price. 
E)  premium.

Question 3

The current market price of a share of MSI stock is $24. If a call option on this stock has a strike price of $24, the call

Accepted Answer

A)  is out of the money. 
B)  is in the money. 
C)  is at the money. 
D)  None of the options are correct. 
A)  is out of the money. 
B)  is in the money. 
C)  is at the money. 
D)  None of the options are correct.

Question 4

Top Flight Stock currently sells for $53. A one-year call option with strike price of $58 sells for $10, and the risk-free interest rate is 5.5%. What is the price of a one-year put with strike price of $58?

Accepted Answer

A)  $10.00 
B)  $12.12 
C)  $16.00 
D)  $11.98 
E)  $14.13 
A)  $10.00 
B)  $12.12 
C)  $16.00 
D)  $11.98 
E)  $14.13

Question 5

A put option on a stock is said to be in the money if

Accepted Answer

A)  the exercise price is higher than the stock price. 
B)  the exercise price is less than the stock price. 
C)  the exercise price is equal to the stock price. 
D)  the price of the put is higher than the price of the call. 
E)  the price of the call is higher than the price of the put. 
A)  the exercise price is higher than the stock price. 
B)  the exercise price is less than the stock price. 
C)  the exercise price is equal to the stock price. 
D)  the price of the put is higher than the price of the call. 
E)  the price of the call is higher than the price of the put.

Question 6

The current market price of a share ofONB stock is $195. If a call option on this stock has a strike price of $195, the call

Accepted Answer

A)  is out of the money. 
B)  is in the money. 
C)  is at the money. 
D)  None of the options are correct. 
A)  is out of the money. 
B)  is in the money. 
C)  is at the money. 
D)  None of the options are correct.

Question 7

You purchased one Coca Cola March 50 put and sold one Coca Cola April 50 put. Your strategy is known as

Accepted Answer

A)  a vertical spread. 
B)  a straddle. 
C)  a time spread. 
D)  a collar. 
A)  a vertical spread. 
B)  a straddle. 
C)  a time spread. 
D)  a collar.

Binary options

The price that the writer of a call option receives to sell the option is called the

The current market price of a share of MSI stock is $24. If a call option on this stock has a strike price of $24, the call

Top Flight Stock currently sells for $53. A one-year call option with strike price of $58 sells for $10, and the risk-free interest rate is 5.5%. What is the price of a one-year put with strike price of $58?

A put option on a stock is said to be in the money if

The current market price of a share ofONB stock is $195. If a call option on this stock has a strike price of $195, the call

You purchased one Coca Cola March 50 put and sold one Coca Cola April 50 put. Your strategy is known as

The Investment Environment

Asset Classes and Financial Instruments

How Securities Are Traded

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

Capital Allocation to Risky Assets

Efficient Diversification

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Empirical Evidence on Security Returns

Bond Prices and Yields

The Term Structure of Interest Rates

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation Models

Financial Statement Analysis

Option Valuation

Futures Markets

Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

Filters

Exam 20: Options Markets: Introduction

Binary options

The price that the writer of a call option receives to sell the option is called the

The current market price of a share of MSI stock is $24. If a call option on this stock has a strike price of $24, the call

Top Flight Stock currently sells for $53. A one-year call option with strike price of $58 sells for $10, and the risk-free interest rate is 5.5%. What is the price of a one-year put with strike price of $58?

A put option on a stock is said to be in the money if

The current market price of a share ofONB stock is $195. If a call option on this stock has a strike price of $195, the call

You purchased one Coca Cola March 50 put and sold one Coca Cola April 50 put. Your strategy is known as

The Investment Environment

Asset Classes and Financial Instruments

How Securities Are Traded

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

Capital Allocation to Risky Assets

Efficient Diversification

Index Models

The Capital Asset Pricing Model

Arbitrage Pricing Theory and Multifactor Models of Risk and Return

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Empirical Evidence on Security Returns

Bond Prices and Yields

The Term Structure of Interest Rates

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation Models

Financial Statement Analysis

Option Valuation

Futures Markets

Futures, Swaps, and Risk Management

Portfolio Performance Evaluation

International Diversification

Hedge Funds

The Theory of Active Portfolio Management

Investment Policy and the Framework of the Cfa Institute

Filters