ch14(6e) sample - ch14(6e) sample 1. You purchase one IBM...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
ch14(6e) sample 1. You purchase one IBM July 120 call contract for a premium of $5. You hold the option until the expiration date when IBM stock sells for $123 per share. You will realize a ______ on the investment. A. $200 profit B. $200 loss C. $300 profit D. $300 loss 2. The maximum loss that could be incurred by the writer of a naked put option is ______________. A. zero B. equal to the exercise price of the put C. equal to the price of the underlying stock on the option's expiration date D. unlimited 3. You invest in the stock of Rayleigh Corp. and write a call option on Rayleigh Corp. This strategy is called a __________. A. covered call B. long straddle C. naked call D. vertical spread 4. You invest in the stock of Valleyview Corp. and purchase a put option on Valleyview Corp. This strategy is called a __________. A. long stradddle B. naked put C. protective put D. short stroll
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
5. The potential loss for a writer of a naked call option on a stock is __________. A. equal to the call premium
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

ch14(6e) sample - ch14(6e) sample 1. You purchase one IBM...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online