Solution-Which potential loss for a writer of a naked call

Which potential loss for a writer of a naked call option

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Reference no: EM132794572

Question 1: Each listed stock option contract gives the holder the right to buy or sell __________ shares of stock.

Multiple Choice

a) 1

b) 10

c) 100

d) 1,000

Question 2: A put option on Dr. Pepper Snapple Group, Inc., has an exercise price of $45. The current stock price is $41. The put option is _________.

Multiple Choice

a) at the money

b) in the money

c) out of the money

d) knocked out

Question 3: The maximum loss a buyer of a stock call option can suffer is the _________.

Multiple Choice

a) call premium

b) stock price

c) stock price minus the value of the call

d) strike price minus the stock price

Question 4: The potential loss for a writer of a naked call option on a stock is _________.

Multiple Choice

a) equal to the call premium

b) larger the lower the stock price

c) limited

d) unlimited

Question 5: A writer of a call option will want the value of the underlying asset to __________, and a buyer of a put option will want the value of the underlying asset to _________.

Multiple Choice

a) decrease; decrease

b) decrease; increase

c) increase; decrease

d) increase; increase

Reference no: EM132794572

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