Review Test Submission: Online Quiz 10

1 of 2

FINS2624-Portfolio Mgmt - s1/2013

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Online quizzes

Online quiz 10

Review Test Submission: Online Quiz 10

Review Test Submission: Online Quiz 10

User

David WANG

Submitted

02/06/13 20:36

Status

Completed

Score

90 out of 100 points

Instructions

Question 1

10 out of 10 points

The maximum loss for a writer of a naked stock call option is

Selected Answer:

unlimited.

Question 2

0 out of 10 points

The shares of CBA are currently priced at $50 each. If a call option on CBA has an exercise price of
$45, the call
Selected Answer:

is in the money.

Question 3

10 out of 10 points

A covered call position is

Selected
Answer:

the purchase of a share of stock with a simultaneous sale of a call on that

stock.

Question 4

10 out of 10 points

Consider a one-year maturity call option and a one-year put option on the same
stock, both with striking price $100. If the risk-free rate is 5%, the stock price is
$103, and the put sells for $7.50, what should be the price of the call?
Selected Answer:

$15.26

Question 5

10 out of 10 points

Buyers of put options would prefer a ____ in the value of the underlying asset and sellers of call
options would prefer a ____ in the value of the underlying asset.
Selected Answer:

decrease; decrease

Question 6

10 out of 10 points

The intrinsic value of an in-the-money put option is equal to

Selected Answer:

the exercise price minus the stock price.

OK

2/06/2013 8:37 PM

Review Test Submission: Online Quiz 10

2 of 2

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Question 7

10 out of 10 points

Suppose you purchase one RIO Dec 100 call contract at $5 and write one RIO Dec 105 call contract
at $2. The option contract size is 1000 shares per contract. The maximum potential profit of your
strategy is
Selected Answer:

$2000

Question 8

10 out of 10 points

The intrinsic value of an out-of-the-money call option is equal to

Selected Answer:

zero.

Question 9

10 out of 10 points

You purchase one September 50 put contract for a put premium of $2. What is the maximum profit
that you could gain from this strategy? The option contract size is 1000 shares per contract.
Selected Answer:

$48,000

Question 10

10 out of 10 points

A call option on a stock is said to be out of the money if

Selected Answer:

the exercise price is higher than the stock price.

Sunday, 2 June 2013 20:36:36 o'clock EST

2/06/2013 8:37 PM