Uncategorized Test Quiz Byadmin August 15, 2022August 24, 2022Write a Comment on Test Quiz 2 Test Quiz Test Quiz 1 / 100 Current value of stock including in portfolio is subtracted from present value of portfolio to calculate last month option price last year option price current option price future option price 2 / 100 Value of option which is considered as its worth as soon as it is expired is classified as minimum option value minimum value maximum value exercise value 3 / 100 Variability of stock price, option term to maturity and risk free rate are dependents of price of an option expiry of an option exercise of an option estimation of an option 4 / 100 Movement of price or rise or fall of prices of options is classified as option lattice pricing movement price change binomial lattice 5 / 100 Type of options in which buyer of options has call on 200 shares in stock is classified as call option stated option unstated option contractual option 6 / 100 In option pricing, an increasing in option price due to time of expiry increases time of expiry decreases exchange time increases exchange time decreases 7 / 100 Sellers of options in financial markets are classified as expiry writer option writer contract writer bond writer 8 / 100 According to Black Scholes model, call option is well exercised on its mid buying date expiry date buying date mid selling date 9 / 100 Stock option is more worthwhile if it is extremely volatile less volatile stable stock unstable price stock 10 / 100 According to Black Scholes model, selling and buying of stock have discount rate transaction costs no transaction costs no discounts 11 / 100 In financial planning, a higher strike price leads to call option price is higher rate is lower price is lower rate is higher 12 / 100 An option which can be exercised any desired time before an expiry date is classified as Australian option money option European option American option 13 / 100 Pricing model approach in which it is assumed that stock price can have one of two values of stock is classified as valued approach marketability approach stock approach binomial approach 14 / 100 Stock option is considered more valuable in situation when stock have price hike in market market stability not volatile highly volatile 15 / 100 Present value of portfolio is Rs 900 and current value of stock in portfolio is Rs 1500 then current option price would be Rs 2,400.00 -Rs 600.00 -Rs 2,400.00 Rs 600.00 16 / 100 Market value of option which is out-of-money is greater than zero equal to zero lesser than zero equal to one 17 / 100 Type of options that do not have stock in portfolio to back up options is classified as undue options due options naked options total options 18 / 100 In binomial approach of option pricing model, last step for finding an option is price hike price value put price call price 19 / 100 According to Black Scholes model, trading of securities and stock prices moves respectively constant and randomly randomly and constant randomly and continuously continuously and randomly 20 / 100 According to Black Scholes model, rate which is constant and known is classified as short term return rate long term return rate risk free interest rate risky rate of return 21 / 100 In stock option, a little chance exists for large gain on stock when price of stock have volatile movement moves freely rarely moves stays same 22 / 100 In options pricing, an exercise price rises from lower to higher which leads to volatile options option value increases option value decreases option value stable 23 / 100 Current option price is added to present value of portfolio for calculating future value of portfolio current value of stock future value of stock present value of portfolio 24 / 100 Price at which European and American options can be exercised is classified as exercise price strike price horizon price Both A and B 25 / 100 Greater value of option, larger span of time value is usually results in shorter call option longer call option longer put option shorter put option 26 / 100 When two portfolios have identical values and payoffs then it is classified as binomial parity relationship put parity relationship put option parity relationship put call parity relationship 27 / 100 According to put call parity relationship, call option plus present value of exercise price minus stock is to calculate present value of option call option put option future value of option 28 / 100 In financial planning, formula MAX [current price of stock-strike price, 0] is used to calculate option return rate exercise value option value stock value 29 / 100 If current price increases from lower to higher then an option value equal to one option value will increase option value will decrease option value equal to zero 30 / 100 In an option pricing, a rises in risk free rate results in option’s value slight time decreases slight increases slight decreases slight time increases 31 / 100 Value of stock is Rs 1000 and current value of portfolio is Rs 1500 then obligation to cover call option will be Rs 6,667.00 Rs 2,500.00 Rs 2,000.00 Rs 500.00 32 / 100 An investor who buys shares and writes a call option on stock is classified as put investor call investor hedger volatile hedge 33 / 100 Present value of portfolio is Rs 1300 and current value of stock in portfolio is Rs 2300 then current option price will be Rs 3,600.00 Rs 1,000.00 Rs 1,250.00 Rs 1,500.00 34 / 100 Present value of portfolio is Rs 500 and current option price is Rs 1200 then value of stock included in portfolio will be Rs 1,700.00 -Rs 1,700.00 Rs 700.00 -Rs 700.00 35 / 100 Current option is Rs 700 and current value of stock in portfolio is Rs 1400 then present value of portfolio will be -Rs 700.00 Rs 2,100.00 Rs 700.00 Rs 2,000.00 36 / 100 In financial planning, most high option price will lead to longer option period smaller option period lesser price higher price 37 / 100 Current value of stock included in portfolio is subtracted from current option price to calculate future value of stock present value of portfolio future value of portfolio present value of stock 38 / 100 According to put call parity relationship, a call option minus put option in addition with present value of exercise is equal to binomial property constant property constant and variable property stock 39 / 100 An investor who writes stock call options in his own portfolio is classified as due option covered option undue option uncovered option 40 / 100 According to Black Scholes model, short term seller receives today price which short term cash proceeds proceeds in cheques full cash proceeds zero proceeds 41 / 100 A type of contract in which contract holder has right to sell an asset at specific period for predetermining price is classified as option written contract determined contract featured contract 42 / 100 Third step in binomial approach of option pricing is to equalize beginning price equalize range of payoffs equalize domain of payoff equalize ending price 43 / 100 An increase in value of option leads to low present value of exercise cost only if it has low volatility interest rates are high interest rates are low high volatility 44 / 100 Second step in binomial approach of option pricing is to define range of values at expiration at buying date at exchange closing time at exchange opening time 45 / 100 Current option is Rs 800 and current value of stock in portfolio is Rs 1900 then present value of portfolio would be -Rs 1,100.00 Rs 2,700.00 Rs 1,100.00 -Rs 2,700.00 46 / 100 Input call parity relationship, put option minus call option in addition with stock is equal to exercise price present value exercise price future value time line value time value of bond 47 / 100 Type of option which cannot be exercised before an expiry date which is classified as European option American option Australian option money option 48 / 100 According to Black Scholes model, purchaser can borrow fraction of security at risk free interest rate which is short term long term transaction cost no transaction cost 49 / 100 Current value of portfolio is Rs 550 and to cover an obligation of call option is Rs 200 then value of stock would be Rs 350.00 Rs 275.00 Rs 750.00 Rs 1,000.00 50 / 100 In binomial approach of option pricing model, fourth step is to create equalize domain of payoff equalize ending price riskless investment high risky investment 51 / 100 Value of stock is Rs 250 and call option obligation is Rs 100 then current value of portfolio would be Rs 125.00 Rs 150.00 Rs 350.00 Rs 2.50 52 / 100 An option that gives investors right to sell a stock at predefined price is classified as put option call option money back options out of money options 53 / 100 Input call parity relationship, present value of exercise price is added to call option which is equal to put option stock call option + stock call option + market price put option + market price 54 / 100 Situation in financial options in which strike price is less than current price of stock is classified as in-the-money out-of-the-money out-of-the-portfolio in-the-portfolio 55 / 100 Current value of stock in portfolio with current option price Rs 20 is Rs 50, then present value of portfolio would be Rs 30.00 Rs 70.00 Rs 40.00 Rs 80.00 56 / 100 At last day when European and American option can be exercised is classified as European date American date expiration date money date 57 / 100 An excess of actual price of option over an exercise value of option is classified as time value options actual options estimated options optional pricing 58 / 100 According to exercise value and option price, market value of option will be zero when stock price is maximum option price is zero stock price is zero stock price is minimum 59 / 100 In binomial approach of option pricing model, value of stock is subtracted from call option obligation value to calculate current value of portfolio future value of portfolio put option value call option value 60 / 100 Types of option markets do not include European option American option expiry option covered options 61 / 100 Long-term equity anticipation security is usually classified as short-term options long-term options short money options yearly call 62 / 100 Yield on Treasury bill with a maturity is classified as a risk free rate but must be equal to an option closing price option beginning price option expiration option model 63 / 100 An exercise of option in future and part of option call value depends specifically on PV of exercising cost FV of exercising cost PV of cost volatility FV of cost volatility 64 / 100 According to Black Schools model, stocks with call option pays the dividends no dividends current price past price 65 / 100 Coupon payment of bond which is fixed at time of issuance remains same becomes stable becomes change becomes low 66 / 100 An effect of interest rate risk and investment risk on a bond’s yield is classified as reinvestment premium investment risk premium maturity risk premium defaulter's premium 67 / 100 Coupon payment is calculated with help of interest rate, then this rate considers as payment interest par interest coupon interest yearly interest rate 68 / 100 Market in which bonds are traded over-the-counter than in an organized exchange is classified as organized markets trade markets counter markets bond markets 69 / 100 An inflation rate including in quoted interest rate on security, is inflation rate expected over security life expected at deferred call at bond issuance expected at time of maturity 70 / 100 Yield of interest rate which is below than coupon rate, this yield is classified as yield to maturity yield to call yield to earning yield to investors 71 / 100 If market interest rate fall below coupon rate then bond will be sold below its par value above its par value equal to return rate seasoned price 72 / 100 Reinvestment risk of bonds is usually higher on income bonds callable bonds premium bonds default free bonds 73 / 100 Rate of return (in percentages) is consists of capital gain yield interest yield return yield + stable yield return yield + instable yield par value + market value 74 / 100 If default probability is zero and bond is not called then yield to maturity is mature expected return rate lower than expected return rate higher than expected return rate equal to expected return rate 75 / 100 A usage of proceeds of new issue to retire issue with high-rate is classified as refunding operation funding operation proceeds operation deferred operation 76 / 100 Specific day at which bond value is repaid can be considered as valued date repayment date payment date maturity date 77 / 100 Type of bonds that are issued by foreign governments or foreign corporations are classified as zero risk bonds zero bonds foreign bonds government bonds 78 / 100 Bonds that can be converted into shares of common stock are classified as convertible bonds stock bonds shared bonds common bonds 79 / 100 If market interest rate rises above coupon rate then bond will be sold equal to return rate seasoned price below its par value above its par value 80 / 100 Rate on debt that increases as soon market rises is classified as rising bet rate floating rate debt market rate debt stable debt rate 81 / 100 According to top rating agencies S&P triple-A and double-A rating bonds are classified as an extremely discounted extremely safe extremely risky extremely inflated 82 / 100 An interest rate which is used in calculation of cash flows of bonds is called required rate of redemption required rate of earning required rate of return required option 83 / 100 Required rate of return in calculating bond’s cash flow is also classified as going rate of return yield earning rate Both A and B 84 / 100 When price of bond is calculated below its par value, it is classified as classified bond discount bond compound bond consideration earning 85 / 100 Type of options that permit bond holder to buy stocks at stated price are classified as provision guarantee warrants convertibles 86 / 100 Bond that has been issued in very recent timing is classified as mature issue earning issue new issue recent issue 87 / 100 Right held with corporations to call issued bonds for redemption is considered as artificial provision call provision redeem provision original provision 88 / 100 Bonds having zero default risk are classified as U.S bonds return security issued security treasury bonds 89 / 100 Indexed bonds that are issued by linking payments to inflation are classified as treasury inflation protected securities premium protected securities risk protected securities liquidity protected securities 90 / 100 Bonds issued by local and state governments with default risk are municipal bonds corporation bonds default bonds zero bonds 91 / 100 Bonds with deferred call have protection which is classified as provision protection provision protection deferred protection call protection 92 / 100 Maturity date decides at time of issuance of bond and legally permissible is classified as original maturity permanent maturity artificial maturity valued maturity 93 / 100 Value generally promises to pay at maturity date and a firm borrows is considered as bonds bond value per value state value par value 94 / 100 Tax free bonds issue for welfare by industrial agencies or pollution control agencies are classified as agent bonds development bonds pollution control bonds Both B and C 95 / 100 Rate of interest which is usually discussed by investors whenever rate of return is discussed is classified as yield to maturity yield to return yield to earning yield to investors 96 / 100 Price of an outstanding bond decreases when market rate is increased decreased earned never changed 97 / 100 Legal document in which rights of issuing corporation and bondholder’s state is classified as legal rights classification indenture ownership statement guarantee statement 98 / 100 Bonds issued by government and backed by U.S government are classified as issued security treasury bonds U.S bonds return security 99 / 100 An increasing in interest rate leads to decline in value of junk bonds outstanding bonds standing bonds premium bonds 100 / 100 Real risk-free interest rate in addition with an inflation premium is equal to required interest rate quoted risk-free interest rate liquidity risk-free interest rate premium risk-free interest rate Your score is LinkedIn Facebook Twitter VKontakte × Add a new location Click on the map to set a marker × × Thank you! 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