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FIN-375 JPC Exam 4 Review Quiz Flashcards | StudBud
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FIN-375 JPC Exam 4 Review Quiz
FIN-375 JPC Exam 4 Review Quiz
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Questions
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Answers
1
Time in the market is different from timing the market
False
True
2
T/F: The buyer of a call option wants the underlying asset to increase in value.
True
False
3
Futures can be used for
All of the above
Hedging
speculating
to obtain the underlying commodity
4
LEAPS are a type of American-style option that have longer maturities of up to 3 years
False
True
5
Who does the Options Clearing Corporation require to post margin?
Buyers of call options
Investors who buy puts
Option writers
6
Adding international stocks will hurt portfolio diversification
True
False
7
If a stock split occurs after an options contract is listed, the contract cannot be adjusted to the terms of the split.
False
True
8
T/F: The buyer of a call option wants the underlying asset to increase in value.
False
True
9
Which of the following derivatives is not traded on exchanges
Futures
Options
Forwards
10
If the premium of a contract is $1.73, how much will be paid to purchase one options contract?
$1.73
$17.30
$173.00
$1,730.00
11
For all practical purposes, listed stock options always expire
on the third Friday of the expiration month.
on the last business day of the expiration month.
three months from the date of the option purchase.
on the first Monday of every calendar quarter.
12
European option: this type of option can be exercised only on the expiration date
False
True
13
When comparing mutual fund performance, it's best to compare to funds in different asset classes & risk characteristics
True
False
14
Since European options can only be exercised on the expiration date, they are less valuable than American-style options
True
False
15
The Chicago Board Options Exchange(CBOE)in 1973 was the 1st exchange to list standardized, exchange-traded stock options
True
False
16
For put option, if the asset price < strike price, then it is "in the money"
False
True
17
T/F: A call option is an obligation to buy the stock at the market price at expiration
True
False
18
U.S. investors cannot trade in foreign derivative securities
False
True
19
The EAFE Index only includes emerging markets
False
True
20
Which of the following is not an example of a comparison universe?
All the mutual funds in the world
Growth funds
Junk bond funds
21
This is a diagram of a...
call option
put option
forward
22
WEBS portfolios
are passively managed and are shares that can be sold by investors
are free from brokerage commissions
are shares that can be sold by investors
are passively managed
23
A convertible bond is...
A bond that converts into shares at a later stage.
A bond that the investor can convert into shares.
A bond that pays no interest until maturity.
A bond that pays fixed interest first and variable later.
24
American options typically have maturity dates of 1-2 years
True
False
25
If the strike price was $50 for a put option, which value would be "out of the money?"
48
50
52
26
The maximum loss the writer of a call option can suffer is
the call premium
the stock price minus the value of the call
the stock price
unlimited
27
The owner of an option can choose to let the option expire on the expiration date without exercising it
False
True
28
What does long futures position mean?
It is the same as selling an option
An obligation to purchase the underlying asset
A right, but not the obligation to purchase the underlying asset
It is the same as buying a forward contract
