Question 1

If you expect stock volatility to rise but have no particular view of direction,then you should

Accepted Answer

A) Sell stock now. 
B) Sell call options. 
C) Buy put options. 
D) All of the above. 
A) Sell stock now. 
B) Sell call options. 
C) Buy put options. 
D) All of the above.

Question 2

If you expect stock volatility to fall but have no particular view of direction,then you should

Accepted Answer

A) Sell stock now. 
B) Sell call options. 
C) Buy put options. 
D) All of the above. 
A) Sell stock now. 
B) Sell call options. 
C) Buy put options. 
D) All of the above.

Question 3

You have $100 to invest in a stock (or options on the stock).The stock is trading for $100.The three-month 100-strike calls on the stock are trading at $4 each.The minimum stock price you expect to see after three months is $60.What is the worst case return on investment you can possibly end up with using stock and/or options?

Accepted Answer

A) -100% 
B) -40% 
C) 0% 
D) +6% 
A) -100% 
B) -40% 
C) 0% 
D) +6%

Question 4

Which of the following statements is TRUE?

Accepted Answer

A) The maximum possible loss to the buyer of a call option is unlimited 
B) The maximum possible loss to the seller of a call option is unlimited 
C) The maximum possible loss to the buyer of a put option is unlimited 
D) The maximum possible loss to the seller of a put option is unlimited 
A) The maximum possible loss to the buyer of a call option is unlimited 
B) The maximum possible loss to the seller of a call option is unlimited 
C) The maximum possible loss to the buyer of a put option is unlimited 
D) The maximum possible loss to the seller of a put option is unlimited

Question 5

You hold the following portfolio: a long position in a European call option on gold with a strike of $975 per oz,a short position in a European put option on gold with a strike of $975 per oz,and a short forward position in gold with a delivery price of $1,000 per oz.All three contracts expire in one month.The value of your position is

Accepted Answer

A) Positive. 
B) Negative. 
C) Zero. 
D) Can be positive,negative,or zero. 
A) Positive. 
B) Negative. 
C) Zero. 
D) Can be positive,negative,or zero.

If you expect stock volatility to rise but have no particular view of direction,then you should

If you expect stock volatility to fall but have no particular view of direction,then you should

Which of the following statements is TRUE?

Overview

Futures Markets

Pricing Forwards and Futures I

Pricing Forwards Futures II

Hedging With Futures Forwards

Interest-Rate Forwards Futures

Options: Payoffs Trading Strategies

No-Arbitrage Restrictions

Early-Exercise/Put-Call Parity

Option Pricing: An Introduction

Binomial Option Pricing

Implementing the Binomial Model

The Black-Scholes Model

Mathematics of Black-Scholes

Beyond Black-Scholes

The Option Greeks

Path-Independent Exotic Options

Exotic Options II: Path-Dependent Options

Value at Risk

Swaps and Floating Rate Products

Equity Swaps

Currency and Commodity Swaps

Term Structure of Interest Rates: Concepts

Estimating the Yield Curve

Modeling Term Structure Movements

Factor Models of the Term Structure

The Heath-Jarrow-Morton Hjmand Libor Market Model LMM

Credit Derivative Products

Structural Models of Default Risk

Reduced-Form Models of Default Risk

Modeling Correlated Default

Filters

Exam 7: Options Markets

If you expect stock volatility to rise but have no particular view of direction,then you should

If you expect stock volatility to fall but have no particular view of direction,then you should

Which of the following statements is TRUE?

Overview

Futures Markets

Pricing Forwards and Futures I

Pricing Forwards Futures II

Hedging With Futures Forwards

Interest-Rate Forwards Futures

Options: Payoffs Trading Strategies

No-Arbitrage Restrictions

Early-Exercise/Put-Call Parity

Option Pricing: An Introduction

Binomial Option Pricing

Implementing the Binomial Model

The Black-Scholes Model

Mathematics of Black-Scholes

Beyond Black-Scholes

The Option Greeks

Path-Independent Exotic Options

Exotic Options II: Path-Dependent Options

Value at Risk

Swaps and Floating Rate Products

Equity Swaps

Currency and Commodity Swaps

Term Structure of Interest Rates: Concepts

Estimating the Yield Curve

Modeling Term Structure Movements

Factor Models of the Term Structure

The Heath-Jarrow-Morton Hjmand Libor Market Model LMM

Credit Derivative Products

Structural Models of Default Risk

Reduced-Form Models of Default Risk

Modeling Correlated Default

Filters