1. Which of the following statements about early option exercise is true?
Correct pricing makes holders indifferent to the timing of exercise.
It is not usually rational as it results in the loss of intrinsic value.
It is not usually rational as it results in the loss of time value.
Options should usually be exercised as soon as they are ITM.
1 of 8
Other questions in this quiz
2. John has bought an option from Paul that allows him to sell 2,000 shares of Intuition Bank stock at a price of USD 38. The option can be exercised at any time over the next three months. The current forward price of Intuition Bank stock is USD 45.
American-style call option
European-style call option
American-style put option
European-style put option
cont - The price of the option (per share) is USD 1.50. What type of option is this?
3. It is June 1. Widgetcorp purchases a 3-month call option costing USD 5 from Enormobank. The underlying asset is a crate of widgets. Widgetcorp has the right, but not the obligation, to buy the widgets at a price of USD 100 per crate.
100
105
cont - The price of widgets on the expiration date (September 1) is USD 110. What is the strike price of the option?
300
4. Which of the following best describes volatility as used in the context of options?
The option's price sensitivity
The riskiness of the underlying asset price
The changeability of the option's price
The initial margin required on opening the options position
5. In the context of options, what is meant by moneyness?
The market value of an option
The extent to which an option is in or out of the money
Comments
No comments have yet been made