Sample Questions
 

 

1. The price that the buyer of a call option pays to acquire the option is called the

A. exercise price
B. execution price
C. premium
D. None of the above

2. The price that the buyer of a call option pays for the underlying asset if she executes her option is called the

A. strike price
B. execution price
C. All of the above
D. None of the above

3. A European call option can be exercised.

A. Any time in the future.
B. Only on the expiration date.
C. Immediately after dividends are paid.
D. None of the above

4. All else equal, call option values are lower

A. in the month of May.
B. for low dividend payout policies.
C. for high dividend payout policies
D. None of the above

5. A put option on a stock is said to be out of the money if

A. the exercise price is higher than the stock price.
B. the exercise price is less than the stock price.
C. the exercise price is equal to the stock price.
D. None of the above


Answers:      1 (C), 2 (A), 3 (B), 4 (C), 5 (B)

 

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