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

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dOut of money options

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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

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bCovered option

✓


cUndue option

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dUncovered option

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View Answer Covered option

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


aPut investor

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bCall investor

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cHedger

✓


dVolatile hedge

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View Answer Hedger

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


aShorter call option

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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

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dOption value equal to zero

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


aDiscount rate

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bTransaction costs

✓


cNo transaction costs

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dNo discounts

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View Answer Transaction costs

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


aOption lattice

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bPricing movement

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cPrice change

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dBinomial lattice

✓


View Answer Binomial lattice

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


aSavings associations

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b Loans associations

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cPreferred and common associations

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dSavings and loans associations

✓



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