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SPL- Beloy > Exam of Beloy (3rd) > Flashcards

Exam of Beloy (3rd) Flashcards

1
Q

A contract giving the owner the right to buy or sell an asset at a fixed price for a given period of time is

A

AN OPTION

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2
Q

A European call option can be exercised

A

ONLY ON THE EXPIRATION DATE

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3
Q

A European put option allows the holder to

A

SELL THE UNDERLYING ASSET AT THE STRIKING PRICE ON THE EXPIRATION DATE

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4
Q

Lookback options have payoffs that

A

DEPEND IN THE PART ON THE MINIMUM OR MAIMUM PROCE OF THE UNDERLYING ASSET

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5
Q

A derivative is a financial instrument whose value is determined by

A

AN UNDERLYING SECURITY

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6
Q

Which contract is an option?

A

BOTH CALL AND PUT

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7
Q

Derivatives are used by corporations as a useful tool for managing certain aspects of the firm’s risk.

A

TRUE

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8
Q

The owner of a put option has

A

THE RIGHT BUT NOT THE ONLIGATIONTO SELLANASSET AT A GIVEN PRICE

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9
Q

A call option on a stock is said to be out of the money if

A

THE EXERCISE PRICE IS HIGHER THAN THE STOCK PRICE

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10
Q

Ms. Co currently own a put option on Stock A with a strike price of P45. If the current price of Stock A is P40, then what is the in-the-money amount of the option?

A

-5

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11
Q

To the option holder, put options are worth ______ when the exercise price is higher; call options are worth ______ when the exercise price is higher.

A

MORE;LESS

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12
Q

The value of a stock put option is positively related to the following factors except

A

THE STOCK PRICE

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13
Q

The price that the buyer of a call option pays for the underlying asset if she executes her option is called the

A

STRIKE OR EXERCISE PRICE

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14
Q

A covered call position is

A

THE PURCHASE OF A SHARE OF A SROCK WITH A SIMULTANEOUS SALE OF A CALL OON THE STOCK

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15
Q

Options, forwards, swaps, and futures are financial assets.

A

FALSE

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16
Q

The owner of a call option has

A

THE RIGHT BUTNOT THE OBLIGATION TO BUY AN ASSET

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17
Q

A seller of a put option on a futures contract obligates them to buy a futures contract should the put buyer exercise the option.

A

TRUE

18
Q

Buyers of call options __________ required to post margin deposits, and sellers of put options __________required to post margin deposits.

A

ARE ;ARE

19
Q

Futures contracts are slower to absorb new information than forward contracts.

A

FALSE

20
Q

Forward contracts are traded through an organized and regulated exchange rather than being negotiated directly between two parties.

A

TRUE

21
Q

An American put option can be exercised

A

ANYTIME ON OR BEORE THE EXPIRATION DATE

22
Q

Buyers of put options anticipate the value of the underlying asset will _______, and sellers of call options anticipate the value of the underlying asset will _____.

A

DECREASE; DECREASE

23
Q

An American put option allows the holder to

A

SELL THE UNDERLYING ASSET AT THE STRIKING PRICE ON OR BEFORE THE EX.

24
Q

A put option on a stock is said to be in the money if

A

THE EXERCISE PRICE IS HIGHER THAN THE STOCK PRICE

25
Q

Under the put option, as the price of the stock decreases, the value of the put option increases.

A

TRUE

26
Q

The strike price is the price at which the holder of a call option can buy a specified amount of stock at the option’s expiration date.

A

TRUE

27
Q

A contract between two parties to buy or sell an asset at a certain time in future for certain price is known as

A

FORWARD CONTRACT

28
Q

Put option gives the holder the right to buy the underlying asset at a certain price (exercise price or strike price) within a specific period of time.

A

FALSE

29
Q

A contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price is known as:

A

FUTURE CONTRACT

30
Q

A call option on a stock is said to be in the money if

A

the exercise price is less than the stock price.

31
Q

A put option on a stock is said to be out of the money if

A

THE EXERCISE PRICE IS LESS THAN THE STOCK PRICE

32
Q

The current market price of a share of a stock is Php80. If a put option on this stock has a strike price of Php75, the put

A

IS OUT OF THE MONEY

33
Q

A call option on a stock is said to be at the money if THE EXERCISE PRICE IS LESS THAN THE STICK PRICE

A

the exercise price is equal to the stock price.

34
Q

Put options gives the holder the right to buy an asset at a certain price within a specific period of time.

A

FALSE

35
Q

A put option on a stock is said to be at the money if

A

THE EXERCISE PRICE IS EQUAL TO THE STOCK PRICE

36
Q

The current market price of a share of JNJ stock is Php60. If a put option on this stock has a strike price of Php55, the put

A

IS OUT OF THE MONEY AND SELS FOR A LOWER PROCE THA IF THE MARKET PRICE IS 50

37
Q

The option buyer who expects a stock price to decline will purchase a put option.

A

TRUE

38
Q

Options contracts contrast with futures contracts because

A

DEPEND IN PART ON THE MINIMUM OR MAXIMUM PRICE OF THE UNDERLYING ASSET DURING THE LIFE OF THE OPTION

39
Q

An American call option can be exercised

A

ANYTIME ON OR BEFORE THE EXPIRATION DATE

40
Q

The current market price of a share of a stock is Php20. If a put option on this stock has a strike price of Php18, the put

A

IS OUT OF THE MONEY

SPL- Beloy (4 decks)

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