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MCQs

Total Questions : 68 | Page 3 of 7 pages
Question 21. The current value of portfolio is $550 and to cover an obligation of call option is $200 then the value of stock would be
  1.    350
  2.    0.0275
  3.    750
  4.    2.75 times
 Discuss Question
Answer: Option C. -> 750
Answer: (c).750
Question 22. The type of option which cannot be exercised before an expiry date which is classified as
  1.    European option
  2.    American option
  3.    Australian option
  4.    money option
 Discuss Question
Answer: Option A. -> European option
Answer: (a).European option
Question 23. The current option is $800 and the current value of stock in portfolio is $1900 then the present value of portfolio would be
  1.    −$1100
  2.    2700
  3.    1100
  4.    −$2700
 Discuss Question
Answer: Option C. -> 1100
Answer: (c).1100
Question 24. In put call parity relationship, the put option minus call option in addition with stock is equal to
  1.    exercise price present value
  2.    exercise price future value
  3.    time line value
  4.    time value of bond
 Discuss Question
Answer: Option A. -> exercise price present value
Answer: (a).exercise price present value
Question 25. According to the Black Scholes model, the purchaser can borrow fraction of security at risk free interest rate which is
  1.    short term
  2.    long term
  3.    transaction cost
  4.    no transaction cost
 Discuss Question
Answer: Option A. -> short term
Answer: (a).short term
Question 26. The present value of portfolio is $500 and the current option price is $1200 then the value of stock included in portfolio will be
  1.    1700
  2.    −$1700
  3.    700
  4.    −$700
 Discuss Question
Answer: Option A. -> 1700
Answer: (a).1700
Question 27. In an option pricing, a rises in risk free rate results in option's value
  1.    slight time decreases
  2.    slight increases
  3.    slight decreases
  4.    slight time increases
 Discuss Question
Answer: Option B. -> slight increases
Answer: (b).slight increases
Question 28. An investor who buys shares and writes a call option on stock is classified as
  1.    put investor
  2.    call investor
  3.    hedger
  4.    volatile hedge
 Discuss Question
Answer: Option C. -> hedger
Answer: (c).hedger
Question 29. The present value of portfolio is $1300 and the current value of stock in portfolio is $2300 then the current option price will be
  1.    3600
  2.    1000
  3.    0.0176
  4.    1.76 times
 Discuss Question
Answer: Option B. -> 1000
Answer: (b).1000
Question 30. The value of stock is $1000 and the current value of portfolio is $1500 then the obligation to cover call option will be
  1.    0.666
  2.    2500
  3.    0.015
  4.    500
 Discuss Question
Answer: Option D. -> 500
Answer: (d).500

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