If a call option is far 'out of the money' the value of the option will be:
Options: Put & Call

Quiz
•
Other
•
1st - 12th Grade
•
Hard
Ashish Patel
Used 56+ times
FREE Resource
5 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
2 mins • 1 pt
Equal to the value of a put option with the same exercise price
Greater than the value of a put option with the same exercise price
Zero
Less than the value of a put option with the same exercise price
2.
MULTIPLE CHOICE QUESTION
2 mins • 1 pt
A/An ______ gives the buyer the right, but not the obligation, to exercise the option at any time before the expiration or maturity date:
American Option
At-The-Money Option
European Option
Asian Option
3.
MULTIPLE CHOICE QUESTION
2 mins • 1 pt
In the Black and Scholes option pricing formula, an increase in a stock's volatility:
Increases the associated call option value
Decreases the associated put option value
Increases or decreases the option value, depending on the level of interest rates
Does not change either the put or call option value because put-call parity holds
4.
MULTIPLE CHOICE QUESTION
2 mins • 1 pt
An American option is more valuable than a European option on the same dividend-paying stock with the same terms because the:
European option contract is not adjusted for stock splits and stock dividends
American option can be exercised from date of purchase until expiration, but the European option can be exercised only at expiration
American options are traded on US exchanges, which offer much more volume and liquidity
Dividend will be in USD and this is a more universally acceptable currency than the EUR
5.
MULTIPLE CHOICE QUESTION
2 mins • 1 pt
Which one of the following transactions would be considered a protective strategy?
Sell a call against a stock you sold short
Buy a call on a stock you own
Buy a put on a stock you own
Sell a put on a stock you own
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