Question
Question 1 (2.5 points) Selling a covered call option is comparable to selling a stock short. Question 1 options: a) True b) False Save Question
Question 1 (2.5 points)
Selling a covered call option is comparable to selling a stock short.
Question 1 options:
a) True | |
b) False |
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Question 2 (2.5 points)
The intrinsic value of a call option is the strike price minus the stock's price.
Question 2 options:
a) True | |
b) False |
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Question 3 (2.5 points)
An option's intrinsic value exceeds the option's price.
Question 3 options:
a) True | |
b) False |
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Question 4 (2.5 points)
A warrant is an option issued by a corporation to buy its stock at a specified price within a specified time period.
Question 4 options:
a) True | |
b) False |
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Question 5 (2.5 points)
Warrants are issued by
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Question 6 (2.5 points)
Since options offer potential leverage, they tend to sell for a time premium.
Question 6 options:
a) True | |
b) False |
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Question 7 (2.5 points)
The intrinsic value of a put is the price of the stock minus the put's strike price.
Question 7 options:
a) True | |
b) False |
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Question 8 (2.5 points)
The CBOE is 1. a secondary market in put and call options 2. a division of the SEC that regulated option trading 3. the first organized options exchange
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Question 9 (2.5 points)
Writing covered call options is more risky than writing naked call options
Question 9 options:
a) True | |
b) False |
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Question 10 (2.5 points)
In addition to put and call options on individual stocks, there are also options on the market as a whole (i.e., an index).
Question 10 options:
a) True | |
b) False |
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Question 11 (2.5 points)
The protective call strategy is an illustration of a short position.
Question 11 options:
a) True | |
b) False |
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Question 12 (2.5 points)
To acquire a straddle, the investor
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Question 13 (2.5 points)
If a call is overvalued, put-call parity suggests that the investor should
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Question 14 (2.5 points)
Put-call parity suggests that
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Question 15 (2.5 points)
The hedge ratio is one piece of information given by the Black/Scholes option valuation model.
Question 15 options:
a) True | |
b) False |
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Question 16 (2.5 points)
Put-call parity suggests that the sum of the prices of a stock, a call and a put on that stock, and a debt instrument maturing at the expiration of the options must equal zero.
Question 16 options:
a) True | |
b) False |
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Question 17 (2.5 points)
According to the Black/Scholes option valuation model, the value of a call option rises as it approaches expiration.
Question 17 options:
a) True | |
b) False |
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Question 18 (2.5 points)
According to the Black/Scholes option valuation model, a call option's value increases if
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Question 19 (2.5 points)
If the investor buys a bull spread, the individual anticipates
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Question 20 (2.5 points)
If the investor buys a bear spread, the individual anticipates
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