1. The maximum gain of a short put option position is
   1. unlimited
   2. the stock's current value.
   3. equal to the premium paid.
   4. zero.
   5. $1,000
2. A bond's market price is
   1. equal to the present value of future principal and interest payments discounted using the market yield.
   2. equal to the face value of only future principal payments discounted using the market yield.
   3. equal to the future value of only future interest payments compounded using the market yield.
   4. equal to the present value of future principal and interest payments discounted using YOUR personal required rate of return.
3. The portfolio you manage includes an A rated corporate bond. Since you purchased it, US Treasury yields have fallen 100 basis points (bps) across the yield curve. You boss tells you to sell the bond and recognize a gain. What could go wrong with his strategy?
   1. Spreads widened by more than the US Treasury yields fell
   2. Spreads tightened by less than the US Treasury yields fell
   3. Spreads tightened by more than the US Treasury yields fell
   4. Spreads widened by less than the US Treasury yields fell
4. Harper Inc. stock currently sells for $100 per share. You decide to pay a $15 premium to purchase a put option with a strike price of $110. The option is currently...
   1. At-the-Money.
   2. In-the-Money.
   3. Out-of-the-Money.
5. Rank the following in order of their relative potential reward for an investor (from highest to lowest potential reward) in the event of strong financial results:
   1. Senior Debt
   2. Common Shares
   3. Preferred Shares
   4. Subordinate Debt