Chapter 9 Mechanics of Options Markets
1) Which of the next describes a name possibility? A) The appropriate to purchase an asset for a sure worth B) The duty to purchase an asset for a sure worth C) The appropriate to promote an asset for a sure worth D) The duty to promote an asset for a sure worth 2) Which of the next is true? A) An extended name is identical as a brief put B) A brief name is identical as an extended put C) A name on a inventory plus a inventory the identical as a put D) Not one of the above three) An investor has exchange-traded put choices to promote 100 shares for $20. There is a 2 for 1 inventory cut up. Which of the next is the place of the investor after the inventory cut up? A) Put choices to promote 100 shares for $20 B) Put choices to promote 100 shares for $10 C) Put choices to promote 200 shares for $10 D) Put choices to promote 200 shares for $20 four) An investor has exchange-traded put choices to promote 100 shares for $20. There is 25% inventory dividend. Which of the next is the place of the investor after the inventory dividend? A) Put choices to promote 100 shares for $20 B) Put choices to promote 75 shares for $25 C) Put choices to promote 125 shares for $15 D) Put choices to promote 125 shares for $16 5) An investor has exchange-traded put choices to promote 100 shares for $20. There is a $1 money dividend. Which of the next is then the place of the investor? A) The investor has put choices to promote 100 shares for $20 B) The investor has put choices to promote 100 shares for $19 C) The investor has put choices to promote 105 shares for $19 D) The investor has put choices to promote 105 shares for $19.05 6) Which of the next describes a brief place in an possibility? A) A place in an possibility lasting lower than one month B) A place in an possibility lasting lower than three months C) A place in an possibility lasting lower than six months D) A place the place an possibility has been bought 7) Which of the next describes a distinction between a warrant and an exchange-traded inventory possibility? A) In a warrant difficulty, somebody has assured the efficiency of the choice vendor within the occasion that the choice is exercised B) The variety of warrants is fastened whereas the variety of exchange-traded choices in existence is determined by buying and selling C) Alternate-traded inventory choices have a strike worth D) Warrants can't be traded after they've been bought eight) Which of the next describes LEAPS? A) Choices that are partly American and partly European B) Choices the place the strike worth adjustments by time C) Alternate-traded inventory choices with longer lives than common exchange-traded inventory choices D) Choices on the common inventory worth throughout a time frame 9) Which of the next is an instance of an possibility class? A) All calls on a sure inventory B) All calls with a specific strike worth on a sure inventory C) All calls with a specific time to maturity on a sure inventory D) All calls with a specific time to maturity and strike worth on a sure inventory 10) Which of the next is an instance of an possibility sequence? A) All calls on a sure inventory B) All calls with a specific strike worth on a sure inventory C) All calls with a specific time to maturity on a sure inventory D) All calls with a specific time to maturity and strike worth on a sure inventory 11) Which of the next should submit margin? A) The vendor of an possibility B) The customer of an possibility C) The vendor and the client of an possibility D) Neither the vendor nor the client of an possibility 12) Which of the next describes an extended place in an possibility? A) A place the place there's a couple of yr to maturity B) A place the place there's greater than 5 years to maturity C) A place the place an possibility has been bought D) A place that has been held for a very long time 13) Which of the next is NOT traded by the CBOE? A) Weeklys B) Monthlys C) Binary choices D) DOOM choices 14) When a six-month possibility is bought A) The value have to be paid in full B) As much as 25% of the choice worth may be borrowed utilizing a margin account C) As much as 50% of the choice worth may be borrowed utilizing a margin account D) As much as 75% of the choice worth may be borrowed utilizing a margin account 15) Which of the next are true for CBOE inventory choices? A) There are not any margin necessities B) The preliminary margin and upkeep margin are decided by formulation and are equal C) The preliminary margin and upkeep margin are decided by formulation and are completely different D) The upkeep margin is normally about 75% of the preliminary margin 16) The value of a inventory is $67. A dealer sells 5 put possibility contracts on the inventory with a strike worth of $70 when the choice worth is $four. The choices are exercised when the inventory worth is $69. What's the dealer's internet revenue or loss? A) Lack of $1,500 B) Lack of $500 C) Acquire of $1,500 D) Lack of $1,000 17) A dealer buys a name and sells a put with the identical strike worth and maturity date. What's the place equal to? A) An extended ahead B) A brief ahead C) Shopping for the asset D) Not one of the above 18) The value of a inventory is $64. A dealer buys 1 put possibility contract on the inventory with a strike worth of $60 when the choice worth is $10. When does the dealer make a revenue? A) When the inventory worth is beneath $60 B) When the inventory worth is beneath $64 C) When the inventory worth is beneath $54 D) When the inventory worth is beneath $50 19) Take into account a put possibility and a name possibility with the identical strike worth and time to maturity. Which of the next is true? A) It's potential for each choices to be within the cash B) It's potential for each choices to be out of the cash C) One of many choices have to be within the cash D) One of many choices have to be both within the cash or on the cash 20) During which of the next instances is an asset NOT thought-about constructively bought? A) The proprietor shorts the asset B) The proprietor buys an in-the-money put possibility on the asset C) The proprietor shorts a ahead contract on the asset D) The proprietor shorts a futures contract on the inventory