Finance MCQs

Page No. 3

An option that gives investors right to sell a stock at predefined price is classified as____________?


aPut option


bCall option


cMoney back options


dOut of money options


View Answer Put option

An increase in value of option leads to low present value of exercise cost only if it has____________?


aLow volatility


bInterest rates are high


cInterest rates are low


dHigh volatility



In financial planning, most high option price will lead to__________?


aLonger option period


b Smaller option period


cLesser price


dHigher price


View Answer Longer option period

An investor who writes stock call options in his own portfolio is classified as__________?


aDue option


bCovered option


cUndue option


dUncovered option


View Answer Covered option

An investor who buys shares and writes a call option on stock is classified as__________? Put investor


aPut investor


bCall investor


cHedger


dVolatile hedge


View Answer Hedger

Greater value of option, larger span of time value is usually results in__________?


aShorter call option


bLonger call option


cLonger put option


dShorter put option


View Answer Longer call option

If current price increases from lower to higher then an____________?


aOption value equal to one


bOption value will increase


cOption value will decrease


dOption value equal to zero



According to Black Scholes model, selling and buying of stock have_______?


aDiscount rate


bTransaction costs


cNo transaction costs


dNo discounts


View Answer Transaction costs

Movement of price or rise or fall of prices of options is classified as_________?


aOption lattice


bPricing movement


cPrice change


dBinomial lattice


View Answer Binomial lattice

Financial corporations which serve individual savers and commercial mortgage borrowers are classified as____________?


aSavings associations


b Loans associations


cPreferred and common associations


dSavings and loans associations



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