174 multiple choice questions

174 multiple choice questions - Final (Fall 2008)...

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Final (Fall 2008) Multiple-Choice {Circle letter of BEST response.} 1. The price that the writer of a put option receives to sell the option is called the: a) premium. 2. An American call option allows the buyer to: b a) sell the underlying asset at the exercise price on or before the expiration date. b) buy the underlying asset at the exercise price on or before the expiration date. c) sell the option in the open market prior to expiration. d) Both (a) and (c). e) Both (b) and (c). 3. To adjust for stock splits: a) the exercise price of the option is reduced by the factor of the split and the number of option held is increased by that factor. b) the exercise price of the option is increased by the factor of the split and the number of option held is reduced by that factor. c) the exercise price of the option is reduced by the factor of the split and the number of option held is reduced by that factor. d) the exercise price of the option is increased by the factor of the split and the number of option held is increased by that factor. e) None of the above. 4. The current market price of a share of Disney stock is $30. If a call option on this stock has a strike price of $35, the call: a) is out of the money. d) Both (a) and (c). b) is in the money. e) Both (b) and (c). c) can be exercised profitably. 5. The maximum loss a buyer of a stock put option can suffer is equal to: c a) the striking price minus the stock price. d) the stock price. b) the stock price minus the value of the call. e) None of these. c)
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This note was uploaded on 04/07/2009 for the course ECON 174 taught by Professor Foster,c during the Winter '08 term at UCSD.

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174 multiple choice questions - Final (Fall 2008)...

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