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MCQs

Total Questions : 68 | Page 5 of 7 pages
Question 41. The stock option is considered more valuable in the situation when the stock have
  1.    price hike in market
  2.    market stability
  3.    not volatile
  4.    highly volatile
 Discuss Question
Answer: Option D. -> highly volatile
Answer: (d).highly volatile
Question 42. The pricing model approach in which it is assumed that stock price can have one of the two values of stock is classified as
  1.    valued approach
  2.    marketability approach
  3.    stock approach
  4.    binomial approach
 Discuss Question
Answer: Option D. -> binomial approach
Answer: (d).binomial approach
Question 43. In the financial planning, a higher strike price leads to call option
  1.    price is higher
  2.    rate is lower
  3.    price is lower
  4.    rate is higher
 Discuss Question
Answer: Option C. -> price is lower
Answer: (c).price is lower
Question 44. An option which can be exercised any desired time before an expiry date is classified as
  1.    Australian option
  2.    money option
  3.    European option
  4.    American option
 Discuss Question
Answer: Option D. -> American option
Answer: (d).American option
Question 45. According to the Black Scholes model, the selling and buying of the stock have
  1.    discount rate
  2.    transaction costs
  3.    no transaction costs
  4.    no discounts
 Discuss Question
Answer: Option B. -> transaction costs
Answer: (b).transaction costs
Question 46. The stock option is more worthwhile if it is
  1.    extremely volatile
  2.    less volatile
  3.    stable stock
  4.    unstable price stock
 Discuss Question
Answer: Option A. -> extremely volatile
Answer: (a).extremely volatile
Question 47. According to the Black Scholes model, the call option is well exercised on its
  1.    mid buying date
  2.    expiry date
  3.    buying date
  4.    mid selling date
 Discuss Question
Answer: Option B. -> expiry date
Answer: (b).expiry date
Question 48. The sellers of options in the financial markets are classified as
  1.    expiry writer
  2.    option writer
  3.    contract writer
  4.    bond writer
 Discuss Question
Answer: Option B. -> option writer
Answer: (b).option writer
Question 49. In the option pricing, an increasing in option price is due to
  1.    time of expiry increases
  2.    time of expiry decreases
  3.    exchange time increases
  4.    exchange time decreases
 Discuss Question
Answer: Option A. -> time of expiry increases
Answer: (a).time of expiry increases
Question 50. The type of options in which the buyer of options has call on 200 shares in stock is classified as
  1.    call option
  2.    stated option
  3.    unstated option
  4.    contractual option
 Discuss Question
Answer: Option A. -> call option
Answer: (a).call option

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