1. To calculate the value of a price weighted index you need which of the following:

A. Which stocks are in the index

B. The price of these stocks

C. The number of shares outstanding for each stock

D. Only a and b

E. All of a, b and c

2. Options on the GGG index are automatically exercised on the expiration date. If an investor is long the July 400 calls and the settlement value of GGG at expiration is 390, what is the amount this investor will receive if she does nothing.

A. $0

B. $10

C. $1,000

D. She will have to pay $10

E. She will have to pay $1,000

3. If the level of an index rises, and at the same time volatility increases, which of the following statements relating to the options on this index will be true:

A. Call prices will increase and put prices will increase

B. Call prices will increase and put prices will decrease

C. Call prices will decrease and put prices will decrease

D. Call prices will increase and put prices may increase or decrease

4. To calculate the value of a market capitalization weighted index you need which of the following:

A. Which stocks are in the index

B. The price of these stocks

C. The number of shares outstanding for each stock

D. Only a and b

E. a, b, and c

5. Index X has 20 component stocks, all with a 40% volatility. Index Y has 400 component stocks, all with a 40% volatility. Which of the following statements is most likely to be true.

A. The volatility of index Y is more than likely to be lower than that of index X

B. The volatility of index X is more than likely to be lower than that of index Y

C. Both indexes will more than likely have a volatility higher than 40%

D. Both a and c