1) In which of the following positions will losses be potentially unlimited?

		Selling stock short
		Buying stock long
		Buying a put
		Buying a call

Buying a straddle

2) Jonny is describing a financial security that he just purchased to his friends in this way: "I bought a security that allows me to buy stock in Company XYZ for $25 per share any time between now and 90 days from now". In this example, what does the $25 refer to?

		The expiration price
		The current stock price
		The premium
		The strike price

3) The writer of a call option gives the buyer of the call option the option of buying the stock at the strike price before the expiration date. Why do we call the transaction between the buyer and the writer a "zero sum game"?

		Because the profit to the buyer is almost always zero
		Because the profit to the writer is almost always zero
		Because the combined profit to the buyer and the seller is zero
		Because there is a zero chance that the buyer will earn a profit
		Because there is a zero change that the writer will earn a profit

4)

Options are securities that provide the potential to act (to buy or sell something) or to do nothing. Buyers of options who do nothing will suffer a loss equal to what?

		The current value of the underlying asset
		The expiration value of the underlying asset
		The strike price of the option
		The future value of the underlying asset
		The option premium