User Account

All Pages

An option to sell an asset is called

Assignment Help Finance Basics
Reference no: EM13517335

1.An option contract gives the option holder:

(a)the right and obligation to buy or sell an asset at a contractual price on or before a specified date.

(b)the right, but not the obligation, to buy or sell an asset at a contractual price on or before a specified date.

(c)no legally enforceable rights and obligations.

(d)the right to buy or sell an asset at a specified price only if the option writer is willing to sell the asset at that price.

2.The price at which an option can be exercised is called the:

(a)settlement price.

(b)spot price.

(c)option premium.

(d)strike price.

3.An option to sell an asset is called:

(a)a call option.

(b)a put option.

(c)a futures option.

(d)a forward option.

4.An option to buy an asset is called:

(a)a call option.

(b)a put option

(c)a futures option.

(d)a forward option.

5.A European option:

(a)is an option traded in Europe.

(b)can be exercised anytime before its maturity date.

(c)can be exercised only in Europe.

(d)can be exercised only on its maturity date.

6.A call option can be replicated by:

(a)lending at the risk-free interest rate and selling common stock.

(b)lending at the risk-free interest rate and buying common stock.

(c)borrowing at the risk-free interest rate and selling common stock.

(d)borrowing at the risk-free interest rate and buying common stock.

7.Which of the following will cause an increase in the value of a call option?

(a)A decrease in the spot price of the optioned asset.

(b)An increase in the exercise price of the option.

(c)A reduction in the standard deviation of the price of the optioned asset.

(d)An increase in the standard deviation of the price of the optioned asset.

8.Which of the following will cause a decrease in the value of a call option?

(a)An increase in the spot price of the optioned asset.

(b)A decrease in the risk-free interest rate.

(c)A reduction in the exercise price of the option.

(d)An increase in the option's expiration date.

9.An out-of-the-money call option is:

(a)an option with a strike price greater than the current spot price of the underlying asset.

(b)an option with a strike price equal to the current spot price of the underlying asset.

(c)an option with a strike price less than the current spot price of the underlying option.

(d)an option with a strike price below the expected price of the underlying asset on the option's maturity date.

Reference no: EM13517335

Questions Cloud

A foreign-currency net investment hedge : Would be accounted for under FASB no. 52, and such hedges are not recommended by financial experts unless they are designed to hedge actual cash flows.
A corporate treasurer could set a cap and a floor : A corporate treasurer could set a cap and a floor on the interest rate for a future loan by:buying an interest-rate put option and then writing an interest-rate call option.
Swapping fixed interest rate payments for floating : Issues fixed-rate debt and is obligated to make fixed-rate payments to its bondholders regardless of whether it receives floating-rate payments from the other counterparty.
To set a cap on the interest rate that a company : The interest-rate cap that a corporate treasurer can set on a future loan is equal to the rate implied by the strike price of an interest-rate:
An option to sell an asset is called : The right, but not the obligation, to buy or sell an asset at a contractual price on or before a specified date.
Foreign-currency contracts are likely to be used : A person wanting to lock in an exchange rate for the payment of a foreign-currency obligation to someone else would:
Forward discount on the dollar relative to the french france : If the one-year Eurodollar rate is 6 percent and the two-year Eurodollar rate is 7 percent, the one-year forward rate implicit in the Eurodollar yield curve is very close to:
The term structure theory which predicts long-term interest : The term structure theory which predicts long-term interest rates will, on average, be higher than short-term interest rates is called
Guidelines for the financial reporting of financial : Guidelines for the financial reporting of financial instruments with off-balance-sheet risk are contained in:

Reviews

Write a Review

Finance Basics Questions & Answers

  What was your holding period return

Presume you bought $5,000 worth of a stock one year ago for $35.46. It has since paid a dividend of $0.88 per share. The stock closed up $1.24 today, closing at $39.04 per share. Unfortunately, you sold it at yesterday's close. What was you..

  What rate of return company make over a 10-year study period

If the average buyout package is $100,000 and the company is able to reduce costs by $20 million per year, what rate of return will the company make over a 10-year study period? Assume all the company's expenditures occur at time 0 and the savings..

  Calculate return on equity

A corporation collects 60 percent of its sales during the month of the sale, 30 percent one month after the sale, and 10 percent two months after the sale. The company expects sales of $10,000 in August, $20,000 in September, $30,000 in October, and ..

  What will the value of the bond l be

What will the value of the Bond S be if the going interest rate is 14%? Round your answer to the nearest cent. $

  Should new issue be undertaken based on earnings per share

Assume that American Health Systems can earn 12% on the proceeds of the stock issue in time to include them in the current year's results. Should the new issue be undertaken based on earnings per share?

  What is the amount of the total liabilities

A firm has net working capital of $640. Long-term debt is $4,180, total assets are $6,230, and fixed assets are $3,910. What is the amount of the total liabilities?

  What is the alternative hypothesis for this hypothesis test

Locate 15 publicly traded retail firms. Consider searching for these retail firms using the following keywords: retail firms, retailers, and publicly traded companies.

  Information about financial planning

Design a financial plan for them. How much would be their initial deposit? Would you use simple or compound interest? Would you compound the interest annually or monthly?

  Value of position change

A position has modified duration of 25 years is worth $100 million. The term structure is flat. By how much does the value of position change if interest values change through 25 basis points?

  Compare the financial ratios with each of the preceding

review the assigned companys financial statements from the past three years.calculate the financial ratios for the

  What rate of growth must be expected for spencer

Spencer Supplies' stock is currently selling for $60 a share. The firm is expected to earn $5.40 per share this year and to pay a year-end dividend of $3.70.

  Comparing and contrasting debt and equity financing

Prepare a paper comparing and contrasting debt and equity financing. In your paper, discuss the following questions:

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd