Options: Put & Call

Options: Put & Call

1st - 12th Grade

5 Qs

quiz-placeholder

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Options: Put & Call

Options: Put & Call

Assessment

Quiz

Other

1st - 12th Grade

Hard

Created by

Ashish Patel

Used 56+ times

FREE Resource

5 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

If a call option is far 'out of the money' the value of the option will be:

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