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Unformatted text preview: Sheet1 Page 1 Suppose you wrote 20 put options at $2.50 per option. The strike price of the option is $25. If the price of the underlying asset a. $50 b. $10 c. $50 d. $10 status: not answered () correct: c your answer:  2 Suppose you buy 20 put options at $2.50 per option. The strike price of the option is $25. If the price of the underlying asset a. $3 b. $5 c. $50 d. $10 status: not answered () correct: d your answer:  3 The BlackScholes formula assumes that stock returns follow which probability distribution? a. Normal distribution b. Poisson distribution c. Binomial distribution d. Alpha distribution status: not answered () correct: a your answer:  4 Suppose you buy 20 put options at $2.50 per option. The strike price of the option is $25. If the price of the underlying asset a. $50 b. $60 Sheet1 Page 2 c. $10 d. $5 status: not answered () correct: a your answer:  5 Bavarian Brew issued convertible bonds with a par value of $1,000. The conversion ratio on the bonds is 7.68, the current m a. 11.64% b. 15.86% c. 18.42% d. 9.41% status: not answered () correct: a your answer:  6 A call option with a $30 strike price on Bavarian Brew stock will expire in one year. If you know that the stock currently sells a. 7.75% b. 14.52% c. 10.29% d. 12.68% status: not answered () correct: c your answer:  7 The purchase of stock and a put option on the stock to limit the downside risk associated with the stock is a strategy known a. the putcall parity. b. a protective put. c. a covered call. d. a straddle. Sheet1 Page 3 status: not answered () correct: b your answer:  8 A call option with a $30 strike price on Bavarian Brew stock will expire in one year. If you know that the risk free rate is 5%, t8 A call option with a $30 strike price on Bavarian Brew stock will expire in one year....
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 Spring '11
 John

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