Chapter 20
Understanding Options
Multiple Choice Questions
1. Firms regularly u the following to reduce risk:
(I) Currency options
(II) Interest-rate options
(III) Commodity options
A) I only
B) II only
C) III only
怎么报名参加雅思D) I, II, and III
Answer: D Type: Medium Page: 541
2. The following are examples of disguid options for firm:
(I) acquiring growth opportunities
(II) ability of the firm to terminate a project when it is no longer profitable
options that are associated with corporate curities that provide flexibility to change the terms of the issues
A) I only
B) II only
C) I and III only
D) I, II, and III
Answer: D Type: Medium Page: 541
3. An investor, in practice, can buy:
(I) an option on a single share of stock
(II) options that are in multiples of 100
(III) a minimum order of 100 options on a share of stock
A) I only
B) II and III only
C) II only
D) III only
四川地震图片Answer: B Type: Easy Page: 542
4. An option that can be exercid any time before expiration date is called:
A) an European option
B) an American option高一英语课文翻译>high tea
C) a call option
D) a put option
Answer: B Type: Easy Page: 542
5. The two principal options exchanges in the U.S.A. are:
(I) International Securities Exchange
(II) New York Stock Exchange
(III) NASDAQ
(IV) Chicago Board of Options Exchange
A) II and III only
B) I and IV only
C) I and II only
D) III and IV only
Answer: B Type: Easy Page: 542
6. In November 2003, an investor buys a call option on Amgen stock with an exerci of price of $65 and expiring in January 2005. If the stock price in November 2003 is $60, then this option is:
(I) in-the-money
(II) out-of-the-money
(III) a LEAPS
A) I only
B) II only
C) III only
D) II and III only
Answer: D Type: Easy Page: 543
7. The payoff (Position) diagram for a put with the same exerci price and premium as the call on the same underlying ast with the same maturity is (like):
A) the inver of the call diagram along the put price
B) unrelated to the call diagram no matter what the exerci price
C) the mirror image of the call diagram around the exerci price
D) exactly the same as the call diagram for the given exerci price
Answer: C Type: Difficult Page: 543
8. In November 2003, an investor buys a put option on Amgen stock with an exerci of price of $55 and expiring in January 2005. If the stock price in November 2003 is $60, then this option is:
(I) in-the-money
(II) out-of-the-money
(III) a LEAPS
A) I only
B) II only
C) III only
D) I and III only
Answer: D Type: Easy Page: 543
9. A put gives the owner the right
A) and the obligation to buy an ast at a given price
B) and the obligation to ll an ast at a given price
C) but not the obligation to buy an ast at a given price
D) but not the obligation to ll an ast at a given price
Answer: D Type: Medium Page: 543
10. The buyer of a call option has the choice to exerci, but the writer of the call option has:
A) The choice to offt with a put option
prisonersB) The obligation to deliver the shares at exerci
C) The choice to deliver shares or take a cash payoff
D) The choice of exercising the call or not
Answer: B Type: Difficult Page: 543
11. Suppo an investor lls (writes) a put option. What will happen if the stock price on the exerci date exceeds the exerci price?
A) The ller will need to deliver stock to the owner of the option
B) The ller will be obliged to buy stock from the owner of the option
C) The owner will not exerci his option
D) None of the above
Answer: C Type: Medium Page: 543
12. Suppo an investor buys one share of stock and a put option on the stock. What will be the value of her investment on the final exerci date if the stock price is below the exerci price? (Ignore transaction costs)
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A) The value of two shares of stock
B) The value of one share of stock plus the exerci price
C) The exerci price
D) The value of one share of stock minus the exerci price
Answer: C Type: Difficult Page: 543
13. Which of the following investors would be happy to e the stock price ri sharply?
(I) Investor who owns the stock and a put option
(II) Investor who has sold a put option and bought a call option
(III) Investor who owns the stock and has sold a call option
(IV) Investor who has sold a call option
A) I and II only
B) III and IV only
C) III only
D) IV only日本女孩节
Answer: A Type: Difficult Page: 543
14. Figure-1 depicts the position diagram of:
A) the buyer of call option
B) the buyer of put option
C) ller (writer) of call option
D) ller (writer) of put option
Answer: A Type: Medium Page: 545
15. Figure-2 depicts the position diagram of:
Value of option
Figure ?
Share Price
A) the buyer of call option
B) the buyer of put option
C) ller (writer) of call option
D) ller (writer) of put option
Answer: B Type: Medium Page: 545
16. Put-call parity can be ud to show:
A) How far in-the-money put options can get
B) How far in-the-money call options can get
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C) The preci relationship between put and call prices given equal exerci prices and equal expiration dates
D) That the value of a call option is always twice that of a put given equal exerci prices and equal expiration dates
Answer: C Type: Difficult Page: 572
17. Buying a call option, investing the prent value of the exerci price in T-bills, and lling the underlying share is the same as:
A) Buying a call and a put
B) Buying a put and a share
C) Buying a put
D) Selling a call
Answer: C Type: Difficult Page: 546
18. Suppo you buy a call and lend the prent value of its exerci price. You could match the payoffs of this strategy by:
A) Buying stock and lling a call
B) Selling a put and lending the prent value of the exerci price
C) Buying stock and buying a put
D) Buying stock and lling a put
韦伯字典网Answer: C Type: Difficult Page: 547
19. Suppo an investor buys one share of stock and a put option on the stock and simultaneously lls a call option on the stock with the same exerci price. What will be the value of his investment
on the final exerci date?如何学习
A) Above the exerci price if the stock price ris and below the exerci price if it falls
B) Equal to the exerci price regardless of the stock price
C) Equal to zero regardless of the stock price
D) Below the exerci price if the stock price ris and above if it falls
Answer: B Type: Difficult Page: 547
20. For European options, the value of a call minus the value of a put is equal to:
A) The prent value of the exerci price minus the value of a share
B) The prent value of the exerci price plus the value of a share
C) The value of a share plus the prent value of the exerci price
D) The value of a share minus the prent value of the exerci price
Answer: D Type: Difficult Page: 549
21. If the stock makes a dividend payment before the expiration date then the put-call parity is:
A) Value of call = value of put + share price - prent value of dividend - prent value exerci price
B) Value of call = value of put - share price + prent value of dividend - prent value exerci price
C) Value of call = value of put + share price + prent value of dividend + prent value exerci price
D) Value of call = value of put + share price + prent value of dividend - prent value exerci price Answer: A Type: Difficult Page: 549
22. For European options, the value of a call plus the prent value of the exerci price is equal to:
A) The value of a put minus the value of a share
B) The value of a share minus the value of a call
C) The value of a put plus the value of a share
D) The value of a share minus the value of a put
Answer: C Type: Difficult Page: 549
23. For European options, the value of a put is equal to:
A) The value of a call minus the value of a share plus the prent value of the exerci price
B) The value of a call plus the value of a share plus the prent value of the exerci price
C) The value of the share minus the value of a call plus the prent value of the exerci price
D) The value of the share minus the prent value of the exerci price plus the valued of a call Answer: A Type: Difficult Page: 550
