Q) 1

Mr. X is interest to compute price of call option on Z-Stock, a hypothetical company, in order to make investment decision. To proceed ahead he needs to compute probability that call option is exercised. Which of the following is Probability that call option is not exercised?

1. N(d2)
2. N(-d2)
3. N(-d1)
4. None of the above

Q2)Which of the followings has a positive impact on price of a European call option?

1. Current spot price
2. Risk free rate
3. Strike Price
4. Expected dividends.
5. Both A and B

Q3)Perfect hedge means Buyer of the underlying asset will

1. receive the locked-in price.
2. Seller of the underlying asset will pay the locked-in price.
3. Both 1 and 2
4. None of the above

Q4)Contango is a market situation when:

1. Forward prices are higher than the spot prices of underlying
2. Forward prices are Lower than the spot prices of underlying
3. Futures prices are higher than the spot prices of underlying
4. Both A and C

Q5)

Suppose an investor took an option position when he was not expecting a rise in the price. In this position, the strategy he should use to hedge against sudden rise in prices is

1. Covered call
2. Protective put
3. Straddle
4. Strangle