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Multiple choice Quiz(Ver páginas relacionadas)


The seller that a put option is betting the the industry value that the stock will decrease.
A)True
B)False

At expiration a contact option will have actually no worth if the stock price is much less than exercise price.
A)True
B)False

If the owner of a speak to option through a strike price the $35 finds the share to be trading because that $42 in ~ expiration, climate the option:
A)expires worthless.
B)will no be exercised.
C)is worth $7 per share.
D)cost too lot initially.

Which that the following is true because that the owner that a contact option?
A)The loss potential is unlimited.
B)The benefit potential is unlimited.
C)The premium over the to win price.
D)There is no expiration date, unless the option is a europe call.

What is the option buyer"s total profit or loss every share if a contact option is purchased for a $5 premium, has actually a $50 practice price, and the share is valued in ~ $53 in ~ expiration?
A)($5)
B)($2)
C)$3
D)$8

Which of the complying with option traders receive, quite than pay, a premium?
A)Option sellers
B)Option buyers
C)Both alternative sellers and also buyers
D)Neither buyers no one sellers obtain premiums

Which that the following is true for an investor the owns a re-superstructure of stock and has purchase a put alternative on the stock?
A)The investor profits once the stock decreases in value.
B)Maximum ns is the price the the choice premium.
C)The investor is protected versus upside potential.
D)Increases in stock value go to the seller the the put.

Which mix of location will have tendency to safeguard the owner from downside risk?
A)Buy the stock and buy a speak to option.
B)Sell the stock and also buy a speak to option.
C)Buy the stock and buy a put option.
D)Buy the stock and sell a placed option.

What is the worst-case profitability scenario for an investor who offered a speak to on the firm"s stock because that a premium the $10 and a to win price that $100?
A)$90 every share profit
B)$10 per share profit
C)$0 every share benefit (break-even)
D)Unlimited losses

Which the the adhering to call options would command the higher premium in September, 2002, other things equal?
A)October 2002 expiration, $45 win price
B)December 2002 expiration, $40 strike price
C)March 2003 expiration, $45 strike price
D)June 2003 expiration, $40 win price

The choice to give up a task investing in real assets have the right to be thought about to have a to win price equal to the:
A)historical price of the asset.
B)market value of the asset in ~ abandonment.
C)forgone earnings anticipated indigenous the project.
D)forgone interest on the bonds provided to finance the real assets.

The conversion proportion for a convertible bond equates to the:
A)ratio that bond value to share price at conversion.
B)number that bonds vital to transform into one re-publishing of stock.
C)number of share of share that deserve to be exchanged for one bond.
D)floor worth beneath i beg your pardon the shortcut price cannot fall.

If a $1,000 convertible bond with a sector value the $950 has actually a conversion ratio of 25 when the firm"s stock is offering for $36 every share, then:
A)the bond will be converted immediately.
B)the bond is violating that "price floor."
C)conversion currently would offer the investor a profit of $900.
D)the conversion worth of the shortcut is $900.

Option buyers have the _____ to practice their options. Choices sellers have a(n) _____ to satisfy the regards to the option contract.
A)obligation; obligation
B)obligation; right
C)right; right
D)right; obligation

The value of a speak to option boosts as the time to expiration boosts because:
A)the exercise price continually decreases.
B)opportunity rises to surpass exercise price.
C)dividends accumulate while wait to it is in paid.
D)the option deserve to be consistently exercised.

Which the the following is incorrect regarding options and the payoff come buyers and also sellers of options?There space two simple types that options. A speak to option is the right to buy an asset at a particular exercise price ~ above or prior to the practice date. A put is the appropriate to market an asset at a certain exercise price ~ above or before the exercise date.The payoff come a speak to is the value of the legacy minus the exercise price if the distinction is positive, and zero otherwise.The payoff come a placed is the practice price minus the value of the heritage if the difference is positive, and zero otherwise.The payoff come the seller of an choice is the an unfavorable of the payoff come the choice buyer.
A)a.
B)b.
C)c.
D)none that the over four explanation is incorrect.

What space the components of contact option values?To exercise the contact option you must pay the exercise price. Various other things equal, the less you room obliged come pay, the better. Therefore, the value of the choice is higher when the practice price is high family member to the share price.Investors who buy the stock by means of a contact option are buying on installment credit. They salary the acquisition price the the alternative today yet they do not salary the practice price until they exercise the option. The greater the price of interest and the much longer the time come expiration, the more this "free credit" is worth.No matter how far the stock price falls, the owner of the speak to cannot lose more than the price the the call. ~ above the other hand, the much more the stock price rises above the exercise price, the greater the profit on the call. Therefore, the option holder walk not lose from raised variability if points go wrong, but gains if they walk right. The value of the option boosts with the variability of stock returns. Of course the much longer the time to the final exercise date, the more opportunity over there is for the stock price to vary.
A)a.
B)b.
C)c.
D)none that the 3 statements is incorrect.

Which the the complying with is incorrect regarding the speak to option value?No matter how much the stock price falls, the owner the the contact cannot lose more than the price of the call.On the other hand, the an ext the share price rises above the practice price, the better the benefit on the call.The option holder loses from raised variability if things go wrong, and gains if they walk right.The value of the option rises with the variability of share returns. Of food the longer the time come the last exercise date, the more opportunity over there is because that the stock price come vary.
A)a.
B)b.
C)c.
D)d.

What choices may be current in funding investment proposals?The prominence of building flexibility right into investment projects have the right to be reformulated in the language that options. For example, many funding investments provide the adaptability to increase capacity later if demand turns the end to be unusually buoyant. They space in effect providing the firm v a contact option ~ above the extra capacity.Firms also think about alternative supplies for their assets if points go wrong. The choice to abandon a task is a put option; the put"s exercise price is the value of the project"s assets if change to an different use.The capability to broaden or to abandon room both present in capital investment proposals and also are both examples of genuine options.
A)a.
B)b.
C)c.
D)all of the three statements space correct.

What alternatives may be noted in financial securities?Many that the securities that firms problem contain an option. For example, a warrant is nothing however a long-term call option issued by the firm.Convertible bonds provide the investors the alternative to buy the firm"s share in exchange because that the value of the underlying bond.Unlike warrants and convertibles, which offer an choice to the investor, callable bonds give the choice to the issuing firm. If interest rates decline and the worth of the basic bond rises, the firm can buy the bonds ago at a mentioned exercise price.
A)a.
B)b.
C)c.
D)a, b and c.

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Contenido worldwide del curso
Fórmulas y ExpresionesGlossaryVideosInteractive FinSimsProfessional ResourcesFinance approximately The WorldCorporate Finance Online
Seleccione un ChapterChapter 1Chapter 2Chapter 3Chapter 4Chapter 5Chapter 6Chapter 7Chapter 8Chapter 9Chapter 10Chapter 11Chapter 12Chapter 13Chapter 14Chapter 15Chapter 16Chapter 17Chapter 18Chapter 19Chapter 20Chapter 21Chapter 22Chapter 23Chapter 24Chapter 25
Pruebas
Multiple selection Quiz
Más recursos
Chapter SummaryExcel TemplatesS&P ProblemsWeb Links