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MCQs

Total Questions : 68 | Page 4 of 7 pages
Question 31. If the current price increases from lower to higher then an
  1.    option value equal to one
  2.    option value will increase
  3.    option value will decrease
  4.    option value equal to zero
 Discuss Question
Answer: Option B. -> option value will increase
Answer: (b).option value will increase
Question 32. In financial planning, the formula MAX[current price of stock-strike price‚0] is used to calculate
  1.    option return rate
  2.    exercise value
  3.    option value
  4.    stock value
 Discuss Question
Answer: Option B. -> exercise value
Answer: (b).exercise value
Question 33. According to put call parity relationship, the call option plus present value of exercise price minus stock is to calculate
  1.    present value of option
  2.    call option
  3.    put option
  4.    future value of option
 Discuss Question
Answer: Option C. -> put option
Answer: (c).put option
Question 34. The greater value of the option, the larger span of time value is usually results in
  1.    shorter call option
  2.    longer call option
  3.    longer put option
  4.    shorter put option
 Discuss Question
Answer: Option B. -> longer call option
Answer: (b).longer call option
Question 35. When two portfolios have identical values and payoffs then it is classified as
  1.    binomial parity relationship
  2.    put parity relationship
  3.    put option parity relationship
  4.    put call parity relationship
 Discuss Question
Answer: Option D. -> put call parity relationship
Answer: (d).put call parity relationship
Question 36. The price at which the European and American options can be exercised is classified as
  1.    exercise price
  2.    strike price
  3.    horizon price
  4.    both a and b
 Discuss Question
Answer: Option D. -> both a and b
Answer: (d).both a and b
Question 37. According to the Black Scholes model, the rate which is constant and known is classified as
  1.    short term return rate
  2.    long term return rate
  3.    risk free interest rate
  4.    risky rate of return
 Discuss Question
Answer: Option C. -> risk free interest rate
Answer: (c).risk free interest rate
Question 38. The current option price is added to present value of portfolio for calculating
  1.    future value of portfolio
  2.    current value of stock
  3.    future value of stock
  4.    present value of portfolio
 Discuss Question
Answer: Option B. -> current value of stock
Answer: (b).current value of stock
Question 39. In the options pricing, an exercise price rises from lower to higher which leads to
  1.    volatile options
  2.    option value increases
  3.    option value decreases
  4.    option value stable
 Discuss Question
Answer: Option C. -> option value decreases
Answer: (c).option value decreases
Question 40. In the stock option, a little chance exists for large gain on stock when the price of stock
  1.    have volatile movement
  2.    moves freely
  3.    rarely moves
  4.    stays same
 Discuss Question
Answer: Option C. -> rarely moves
Answer: (c).rarely moves

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