25questions - 1) An American put option can be exercised A)...

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1) An American put option can be exercised A) any time on or before the expiration date. B) only on the expiration date. C) any time in the indefinite future. D) only after dividends are paid. 2) 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. B) is in the money. C) can be exercised profitably. D) A and C. 3) You write one JNJ February 70 put for a premium of $5. Ignoring transactions costs, what is the breakeven price of this position? A) $65 B) $75 C) $5 D) $70 4) Buyers of put options anticipate the value of the underlying asset will __________ and sellers of call options anticipate the value of the underlying asset will ________. A) increase; increase B) decrease; increase C) increase; decrease D) decrease; decrease 5) A protective put strategy is A) a long put plus a long position in the underlying asset.
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B) a long put plus a long call on the same underlying asset. C) a long call plus a short put on the same underlying asset. D) a long put plus a short call on the same underlying asset. 6) All of the following factors affect the price of a stock option except A) the risk-free interest rate. B) the strike price of the option. C) the time to expiration. D) the required return on equity. 7) The value of a stock put option is positively related to the following factors except A) the time to expiration.
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This note was uploaded on 01/05/2012 for the course 101 melissa jo taught by Professor Acc101 during the Spring '11 term at Aarhus Universitet.

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25questions - 1) An American put option can be exercised A)...

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