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MCQs

Total Questions : 68 | Page 7 of 7 pages
Question 61. The third step in binomial approach of option pricing is to
  1.    equalize the beginning price
  2.    equalize the range of payoffs
  3.    equalize the domain of payoff
  4.    equalize the ending price
 Discuss Question
Answer: Option B. -> equalize the range of payoffs
Answer: (b).equalize the range of payoffs
Question 62. According to the Black Scholes model, the short term seller receives today's price which
  1.    short term cash proceeds
  2.    proceeds in cheques
  3.    full cash proceeds
  4.    zero proceeds
 Discuss Question
Answer: Option C. -> full cash proceeds
Answer: (c).full cash proceeds
Question 63. An increase in value of option leads to low present value of exercise cost only if it has
  1.    low volatility
  2.    interest rates are high
  3.    interest rates are low
  4.    high volatility
 Discuss Question
Answer: Option B. -> interest rates are high
Answer: (b).interest rates are high
Question 64. An investor who writes stock call options in his own portfolio is classified as
  1.    due option
  2.    covered option
  3.    undue option
  4.    uncovered option
 Discuss Question
Answer: Option B. -> covered option
Answer: (b).covered option
Question 65. The current option is $700 and the current value of stock in portfolio is $1400 then the present value of portfolio will be
  1.    −$700
  2.    2100
  3.    700
  4.    0.02
 Discuss Question
Answer: Option C. -> 700
Answer: (c).700
Question 66. According to put call parity relationship, a call option minus put option in addition with present value of exercise is equal to
  1.    binomial property
  2.    constant property
  3.    constant and variable property
  4.    stock
 Discuss Question
Answer: Option D. -> stock
Answer: (d).stock
Question 67. The current value of stock included in portfolio is subtracted from current option price to calculate
  1.    future value of stock
  2.    present value of portfolio
  3.    future value of portfolio
  4.    present value of stock
 Discuss Question
Answer: Option B. -> present value of portfolio
Answer: (b).present value of portfolio
Question 68. In financial planning, the most high option price will lead to
  1.    longer option period
  2.    smaller option period
  3.    lesser price
  4.    higher price
 Discuss Question
Answer: Option A. -> longer option period
Answer: (a).longer option period

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