Question 32

Which of the following is the correct calculation of the conversion value?

a. par value/market value

b. conversion price x stock price

c. conversion ratio x conversion price

d. conversion ratio x stock price

4 points

Question 33

Which of the following is the correct calculation of the premium over conversion value?

a. market price minus par value

b. market price minus conversion ratio

c. market price minus conversion value

d. market price minus stock price

4 points

Question 34

A bond has a par value of $1,000, a market value of $1,100, a conversion price of $50, and an associated stock price of $51. The premium over conversion value is

a. $0.

b. $50.

c. $80.

d. $100.

4 points

Question 35

A bond has a par value of $1,000, a market value of $900, a conversion price of $45, and an associated stock price of $40. The premium over conversion value is

a. $0.

b. $5.00.

c. $11.11.

d. $100.00.

4 points

Question 36

A put option gives its owner

a. the right to buy.

b. the right to sell.

c. the right to buy or sell.

d. the right to buy back shares previously sold.

4 points

Question 37

A football ticket is most similar to

a. a share of stock.

b. a bond.

c. a put option.

d. a call option.

4 points

Question 38

An option premium equals

a. intrinsic value minus time value.

b. time value minus intrinsic value.

c. time value plus intrinsic value.

d. time value.

4 points

Question 39

An option that is in-the-money

a. must have intrinsic value.

b. must have time value.

c. must have a negative premium.

d. must have time value greater than its premium.

4 points

Question 40

A put is in-the-money if

a. its strike price equals the stock price.

b. its strike price is greater than the stock price.

c. its strike price is less than the stock price.

d. it is guaranteed by the OCC.