option - Frohlich Fin 4504 Name_ Investments ALL WORK MUST...

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Frohlich Fin 4504 Name___________ Investments ALL WORK MUST BE SHOWN---DO NOT JUST CIRCLE THE ANSWER: Use the following information to answer the next 2 questions: A customer buys 1 XMI Feb 250 Put @ 4 when XMI closes at 247. 1. The time value in the premium is: 2. The intrinsic value of the contract is: 3. All of the following are standardized for listed option contracts EXCEPT: a. strike price b. contract size c. premium d. expiration 4. . Which contract will likely have the highest premium(option price) when ABC closes at \$38 per share? a. ABC Jan 35 Call b. ABC Jan 35 Put c. ABC Jan 40 Call d. ABC Jan 30 Put SPREADS: Use the following information to answer the next 3 questions: On the same day a customer buys 1 ABC Feb 70 Call @ \$4 and sells 1 ABC Feb 80 Call @ \$1 when the market price of ABC is \$70. 5. The maximum potential loss is: a. \$300 b. \$400 c. \$7400 d. \$7700

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6. The breakeven point is (the price where all cash outflows are equal to the market): a. 73 b. 74 c. 76 d. 77 7. The maximum potential gain is: a. \$300 b. \$400 c. \$700 d. unlimited Use the following information to answer the next 3 questions: On the same day a customer buys 1 ABC Jan 50 Call @ \$2 and sells 1 ABC Jan 35 Call @ \$8 when the market price of ABC is \$41. 8. The maximum potential gain is: a. \$600 b. \$800 c. \$4800 d. unlimited 9. The maximum potential loss is: a. \$600 b. \$800 c. \$900 d. unlimited 10. The breakeven point is: a. 37 b. 41 c. 44 d. 48
Use the following information to answer the next 3 questions: A customer buys ABC Jan 70 Put @ \$5 and sells 1 ABC Jan 90 Put @ \$19 when the market price of ABC is \$75

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This note was uploaded on 07/09/2011 for the course FIN 4504 taught by Professor Banko during the Summer '08 term at University of Florida.

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option - Frohlich Fin 4504 Name_ Investments ALL WORK MUST...

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