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Derivatives Final Exam Questions And Answers With Verified Solutions
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Derivatives Final Exam Questions And Answers With Verified Solutions
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Derivatives Final Exam Questions And Answers With Verified Solutions Which of the following describes a call option? A.The right to buy a n asset for a certain price B.The obligation to buy an asset for a certain price C.The right to sell an asset for a certain price D.The obligation to sell an asset for a certain price Correct Answer: A.The right to buy an asset for a certain price 2.Which of the following is true? A.A long call is the same as a short put B.A short call is the same as a long put C.A call on a stock plus a stock the same as a put D.None of the above Correct Answer: D.None of the above 3.An investor has exchange -traded put options to sell 100 shares for $20. There is a 2 for 1 stock split. Which of the following is the position of the investor after the stock split? A.Put options to sell 100 shares for $20 B.Put options to sell 100 shares for $10 C.Put options to sell 200 s hares for $10 D.Put options to sell 200 shares for $20 Correct Answer: C.Put options to sell 200 shares for $10 6.Which of the following describes a short position in an option? A.A position in an option lasting less than one month B.A position in an opt ion lasting less than three months C.A position in an option lasting less than six months D.A position where an option has been sold Correct Answer: D.A position where an option has been sold 7.Which of the following describes a difference between a warrant and an exchange -traded stock option? A.In a warrant issue, someone has guaranteed the performance of the option seller in the event that the option is exercised B.The number of warrants is fixed whereas the number of exchange -traded options in existence depends on trading C.Exchange -traded stock options have a strike price D.Warrants cannot be traded after they have been purchased Correct Answer: B.The number of warrants is fixed whereas th e number of exchange -traded options in existence depends on trading 1.Which of the following describes LEAPS? A.Options which are partly American and partly European B.Options where the strike price changes through time C.Exchange -traded stock options wit h longer lives than regular exchange -traded stock options D.Options on the average stock price during a period of time Correct Answer: C.Exchange -traded stock options with longer lives than regular exchange -traded stock options 8.Which of the following i s an example of an option class? A.All calls on a certain stock B.All calls with a particular strike price on a certain stock C.All calls with a particular time to maturity on a certain stock D.All calls with a particular time to maturity and strike pric e on a certain stock Correct Answer: A.All calls on a certain stock 9.Which of the following is an example of an option series? A.All calls on a certain stock B.All calls with a particular strike price on a certain stock C.All calls with a particular tim e to maturity on a certain stock D.All calls with a particular time to maturity and strike price on a certain stock Correct Answer: D.All calls with a particular time to maturity and strike price on a certain stock 10.Which of the following must post mar gin? A.The seller of an option B.The buyer of an option C.The seller and the buyer of an option D.Neither the seller nor the buyer of an option Correct Answer: A.The seller of an option 11.Which of the following describes a long position in an option? A.A position where there is more than one year to maturity B.A position where there is more than five years to maturity C.A position where an option has been purchased D.A position that has been held for a long time Correct Answer: C.A position where an option has been purchased 12.Which of the following is NOT traded by the CBOE? A.Weeklys B.Monthlys C.Binary options D.DOOM options Correct Answer: B.Monthlys 13.When a six -month option is purchased A.The price must be paid in full B.Up to 25% of the optio n price can be borrowed using a margin account C.Up to 50% of the option price can be borrowed using a margin account D.Up to 75% of the option price can be borrowed using a margin account Correct Answer: A.The price must be paid in full
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