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Options(created by Selena-GCUT) Flashcards | StudBud
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Options(created by Selena-GCUT)
Options(created by Selena-GCUT)
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Questions
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Answers
1
What is the payoff of a short call when the strike price is $10 and the market price is $12?
0
-2
2
2
Which of the following is a description of a
short
put:
has the right to sell the underlying asset with the agreed price
has the right to buy the underlying asset with the agreed price
has the obligation to sell when the counter-party exercise the option
has the obligation to buy when the counter-party exercise the option
3
The current market price of Disney stock is $60. If a call option on this stock has a strike price of $65, the call is
At the money
In the money
Out of money
4
If you expect the stock price to go down, what kind of options contract will you enter?
Long call
Short call
Short put
Long put
5
The break-even point of an option is when:
The option is at the money
The profit is 0
The payoff is 0
6
Which of the following statements are correct?
European options can only be exercised on the expiration date
An option will only be exercised if the payoff is positive
An option will only be exercised if the profit is positive
7
When a put option of stock is in the money:
Exercise price is the same as the stock price
Exercise price is greater than the stock price
Exercise price is lower than the stock price
8
Options are typical:
Contingent claims
Forward commitments
Swaps
Forward contracts
9
What is the profit for a long put when the stock price is $3, the strike price is $5, and the premium is $1?
-1
1
3
-3
10
An American option can be exercised
after the expiration date
only on the expiration date
any time on or before the expiration date
11
What is the payoff of a long put when the strike price is $8 and the market price is $11?
3
-3
0
12
If the stock price is $100 now, and the exercise price is $103, will you exercise your option if you long a put option?
Yes
No
