Exam 20: Options

All of the following factors affect the price of a share option except the:

Under certain circumstances an options contract may be a preferred hedging instrument.Discuss.

In the options markets,an American put option can be exercised:

In expectation of increased price volatility,an investor purchased a call option and at the same time bought a put option,both with out-of-the-money exercise prices on the same underlying asset.The strategy is known as a:

When interest rates are forecasted to rise,a company approaches its bank before the next roll-over date of its current debt facilities,and buys an interest rate cap option.However,the company is concerned at the cost of the cap premium and decides to simultaneously sell an interest rate floor option of the same maturity.Which of the following statements is correct?

In options markets,the maximum loss a buyer of a share put option can undergo is equal to the:

The value of a put option rises when the underlying asset:

A short-call party to a call option with an exercise price of $10.00 and a premium of $1.00,if the current price of the underlying asset is $8.00 on the exercise date,would make a loss of $1.00

Which of the following best reflects the exposure position of a writer of a put option?

In expectation of increased price stability,an investor sells a call option and at the same time sells a put option with common exercise prices on the same underlying asset.The strategy is known as a:

An investor purchased a call option and wrote a call option at an exercise price higher than that of the long call option.The strategy is known as a:

In the Australian options markets a LEPO is:

Calculate the value of a long call if the exercise price is $10.00,the premium is $1.50 and the spot price is $8.00,given V = max(S-X,0)- P.

In the option markets,the option that gives the buyer the right to buy the specified commodity or financial instrument is a/an:

Which of the following factors is NOT generally regarded as a major determinant of the price of an option?

The intrinsic value of an option is:

Discuss a call option writer's risk exposure and some strategies they might use to minimise any possible loss exposure.

In option language,a 'cap' is a:

The most important benefit of an options contract strategy for a hedger is:

If a risk manager wants to put on an upper limit on an interest rate payable on a future borrowing by buying an option and at the same time he wants an option that puts a minimum limit on how low interest rate payable may fall,this combination is called: