# Derivatives

## Quiz 7 :Options Markets

Showing 1 - 20 of 25
The largest markets for derivatives based on notional outstandings are
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Multiple Choice

B

Which of the following is a valid completion of the sentence-"An American option ..."?
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Multiple Choice

C

The writer of a put option on a stock
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Multiple Choice

D

The premium of an option is
Multiple Choice
Which of the following statements is true of an option's payoff?
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If your directional view is that stock prices are going to fall,you should
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If you believe that stock prices are going to fall for sure,then given a fixed amount of capital,you should
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If you expect stock volatility to fall but have no particular view of direction,then you should
Multiple Choice
If you expect stock volatility to rise but have no particular view of direction,then you should
Multiple Choice
A call option with a strike of K = 100 is purchased at a premium of $4.The stock price at maturity is$105.The net payoff of the option is
Multiple Choice
You have a portfolio with long positions in both puts and calls.The volatility in the market rises.
Multiple Choice
You anticipate that volatility will increase sharply and the stock price will fall.Select the most profitable of the following portfolios to hold,given your views:
Multiple Choice
You have a long position in a stock that you purchased for $100,and a short position in a put option on the same stock at strike K = 100.At maturity the stock price is$95,and you liquidate your stock and option positions.Your gross payoff (cash flow)is
You have a long position in a stock that you purchased for $100,a short position in a call and a long position in a put,both at strike K = 100.At maturity the stock price is ST,and you liquidate your stock and option positions.Your gross payoff (cash flow)is Multiple Choice Answer: You sold a call option at strike 105 for a price of$3 and sold a put option at strike 95 for a price of $2,both options with the same maturity.In what range of stock prices at maturity will you make money or not lose (on your net payoff)? Multiple Choice Answer: You have$100 to invest.You can invest it in one of two alternatives.The first is to invest it in a stock that is trading for $100.The second is to buy three-month 100-strike calls on the stock that are currently trading at$4 each.You expect the stock price to appreciate with a maximum price after three months of $110.What is the maximum return on investment you can generate using stock and options? Multiple Choice Answer: You have$100 to invest in a stock (or options on the stock).The stock is trading for $100.The three-month 100-strike calls on the stock are trading at$4 each.The minimum stock price you expect to see after three months is $60.What is the worst case return on investment you can possibly end up with using stock and/or options? Multiple Choice Answer: You hold the following portfolio: a long position in a European call option on gold with a strike of$975 per oz,a short position in a European put option on gold with a strike of $975 per oz,and a short forward position in gold with a delivery price of$1,000 per oz.All three contracts expire in one month.The value of your position is