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MCQs

Total Questions : 68 | Page 6 of 7 pages
Question 51. If the stock market price is higher than the strike price, then the call option
  1.    price will be lower
  2.    rate will be higher
  3.    price will be higher
  4.    rate will be lower
 Discuss Question
Answer: Option C. -> price will be higher
Answer: (c).price will be higher
Question 52. The first step in binomial approach of option pricing is to
  1.    define ending price of stock
  2.    define beginning price of stock
  3.    define range of values
  4.    define domain of values
 Discuss Question
Answer: Option A. -> define ending price of stock
Answer: (a).define ending price of stock
Question 53. The present value of portfolio $850 and the current option price $1620 then the value of stock included in portfolio would be
  1.    0.019
  2.    1.90 times
  3.    770
  4.    2470
 Discuss Question
Answer: Option C. -> 770
Answer: (c).770
Question 54. The situation in financial options in which the strike price is less than current price of stock is classified as
  1.    in-the-money
  2.    out-of-the-money
  3.    out-of-the-portfolio
  4.    in-the-portfolio
 Discuss Question
Answer: Option A. -> in-the-money
Answer: (a).in-the-money
Question 55. In binomial approach of option pricing model, the fourth step is to create
  1.    equalize the domain of payoff
  2.    equalize the ending price
  3.    riskless investment
  4.    high risky investment
 Discuss Question
Answer: Option C. -> riskless investment
Answer: (c).riskless investment
Question 56. An option that gives investors the right to sell a stock at predefined price is classified as
  1.    put option
  2.    call option
  3.    money back options
  4.    out of money options
 Discuss Question
Answer: Option A. -> put option
Answer: (a).put option
Question 57. In put call parity relationship, the present value of exercise price is added to call option which is equal to
  1.    put option stock
  2.    call option + stock
  3.    call option + market price
  4.    put option + market price
 Discuss Question
Answer: Option A. -> put option stock
Answer: (a).put option stock
Question 58. The value of stock is $250 and the call option obligation is $100 then the current value of portfolio would be
  1.    0.35 times
  2.    150
  3.    350
  4.    2.5
 Discuss Question
Answer: Option B. -> 150
Answer: (b).150
Question 59. The second step in binomial approach of option pricing is to define range of values
  1.    at expiration
  2.    at buying date
  3.    at exchange closing time
  4.    at exchange opening time
 Discuss Question
Answer: Option A. -> at expiration
Answer: (a).at expiration
Question 60. A type of contract in which the contract holder has the right to sell an asset at specific period for predetermining price is classified as
  1.    option
  2.    written contract
  3.    determined contract
  4.    featured contract
 Discuss Question
Answer: Option A. -> option
Answer: (a).option

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