Investment Test

1. Purchasers of computer storage resources
A) own a financial asset with benefits of regular ownership.
B) have a claim on the profits of the firm issuing the underlying securities.
C) have the obligation to buy or cover a predetermined amount of shares at the scrub price.
D) have the right to buy or sell a certain number of underlying shares.

2. Which of the following statements concerning options are reform?
I.Options are derivative securities.
II.The range of an option is dependent upon the value of the underlying security.
three.The seller of the option retains the option premium whether or not the option is exercised.
IV.Options can provide supplement benefits.
A) II and III only
B) I, II and III only
C) I, II and IV only
D) I, II, III and IV

3. Which of the following is true about rights?
A) They are usually attach to bonds as a sweetener
B) The owner has several days in which to exercise the option.
C) They are a type of perfunctory call option.
D) They are a type of short-lived mold option.

4. The ability to obtain a given equity state of affairs at a reduced capital investment, and therefore overstate returns, is known as
A) leverage.
B) straddling.
C) hedging.
D) triple witching.

5. The writer of a put
A) accepts the obligation to sell a predetermined number of shares at a predetermined price.




B) is betting the price of the underlying security depart ontogeny in value.
C) is hoping that the put will be in-the-money prior to expiration.
D) will pay the premium whether or not the option is exercised.

6. The both provisions which investors should carefully consider when evaluating stock options are the
A) blast price and the exchange ratio.
B) time until expiration and the strike price.
C) leverage ratio and the time to maturity.
D) premium and the discount.

7. A put option has a strike price of $32. The current price of the stock is $34. The put option is said to be in-the-money.
TRUE/FALSE


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