ch22 - ch22 Student:

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Unformatted text preview: ch22 Student: _______________________________________________________________________________________ Multiple Choice Questions 1. A financial contract that gives its owner the right, but not the obligation, to buy or sell a specified asset at an agreed-upon price on or before a given future date is called a(n) _____ contract. A. option B. futures C. forward D. swap E. straddle 2. The act where an owner of an option buys or sells the underlying asset, as is his right, is called ______ the option. A. striking B. exercising C. opening D. splitting E. strangling 3. The fixed price in an option contract at which the owner can buy or sell the underlying asset is called the option's: A. opening price. B. intrinsic value. C. strike price. D. market price. E. time value. 4. The last day on which an owner of an option can elect to exercise is the _____ date. A. ex-payment B. ex-option C. opening D. expiration E. intrinsic 5. An option that may be exercised at any time up its expiration date is called a(n) _____ option. A. futures B. Asian C. Bermudan D. European E. American 6. An option that may be exercised only on the expiration date is called a(n) _____ option. A. European B. American C. Bermudan D. futures E. Asian 7. A _____ is a derivative security that gives the owner the right, but not the obligation, to buy an asset at a fixed price for a specified period of time. A. futures contract B. call option C. put option D. swap E. forward contract 8. A _____ is a derivative security that gives the owner the right, but not the obligation, to sell an asset at a fixed price for a specified period of time. A. futures contract B. call option C. put option D. swap E. forward contract 9. A trading opportunity that offers a riskless profit is called a(n): A. put option. B. call option. C. market equilibrium. D. arbitrage. E. cross-hedge. 10. The value of an option if it were to immediately expire, that is, its lower pricing bound, is called an option's _____ value. A. strike B. market C. volatility D. time E. intrinsic 11. The relationship between the prices of the underlying stock, a call option, a put option, and a riskless asset is referred to as the _____ relationship. A. put-call parity B. covered call C. protective put D. straddle E. strangle 12. The effect on an option's value of a small change in the value of the underlying asset is called the option: A. theta. B. vega. C. rho. D. delta. E. gamma. 13. An option that grants the right, but not the obligation, to sell shares of the underlying asset on a particular date at a specified price is called: A. either an American or a European option. B. an American call. C. an American put. D. a European put. E. a European call....
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ch22 - ch22 Student:

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