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Questions in this quiz (13)
1The spot price of the market index is $900. A 3-month forward contract on this index is priced at $930. What is the profit or loss to a short position if the spot price of the market index rises to $920 by the expiration date?
- A$20 gain
- B$20 loss
- C$10 gain
- D$10 loss
2 The spot price of the market index is $900. A 3-month forward contract on this index is priced at $930. The market index rises to $920 by the expiration date. The annual rate of interest on treasuries is 2.4% (0.2% per month). What is the difference in the payoffs between a long index investment and a long forward contract investment? (Assume monthly compounding.)
- A$10.84
- B$24.59
- C$26.40
- D$43.20
3The spot price of the market index is $900. A 3-month forward contract on this index is priced at $930. The annual rate of interest on treasuries is 2.4% (0.2% per month). What annualized rate of interest makes the net payoff zero? (Assume monthly compounding.)
- A4.8%
- B8.5%
- C11.2%
- D13.2%
4The spot price of the market index is $900. After 3 months, the market index is priced at $920. An investor has a long call option on the index at a strike price of $930. After 3 months, what is the investor's profit or loss?
- A$10 loss
- B$0
- C$10 gain
- D$20 gain
5The spot price of the market index is $900. After 3 months the market index is priced at $920. The annual rate of interest on treasuries is 2.4% (0.2% per month). The premium on the long put, with an exercise price of $930, is $8.00. What is the profit or loss at expiration for the long put?
- A $2.00 gain
- B$2.00 loss
- C$1.95 gain
- D$1.95 loss
6The spot price of the market index is $900. After 3 months the market index is priced at $920. The annual rate of interest on treasuries is 2.4% (0.2% per month). The premium on the long put, with an exercise price of $930, is $8.00. At what index price does a long put investor have the same payoff as a short index investor? Assume the short position has a breakeven price of $930.
- A$921.90
- B$930.00
- C$938.05
- D$940.00
7All of the positions listed will benefit from a price decline, except:
- AShort put
- BLong put
- CShort call
- DShort stock
8The spot price of the market index is $900. The annual rate of interest on treasuries is 2.4% (0.2% per month). After 3 months the market index is priced at $920. An investor has a long call option on the index at a strike price of $930. What profit or loss will the writer of the call option earn if the option premium is $2.00?
- A $2.00 gain
- B$2.00 loss
- C$2.01 gain
- D$2.01 loss
9The spot price of the market index is $900. After 3 months the market index is priced at $915. The annual rate of interest on treasuries is 2.4% (0.2% per month). The premium on the long put, with an exercise price of $930, is $8.00. Calculate the profit or loss to the short put position if the final index price is $915.
- A$15.00 gain
- B$15.00 loss
- C$6.95 gain
- D$6.95 loss
10 If your homeowner's insurance premium is $1,000 and your deductible is $2000, what could be considered the strike price of the policy if the home has a value of $120,000?
- A$118,000
- B$120,000
- C$117,000
- D $122,000
11A put option is purchased and held for 1 year. The Exercise price on the underlying asset is $40. If the current price of the asset is $36.45 and the future value of the original option premium is (-$1.62), what is the put profit, if any, at the end of the year?
- A$1.62
- B$1.93
- C$3.55
- D$5.17
12The premium on a long term call option on the market index with an exercise price of 950 is $12.00 when originally purchased. After 6 months the position is closed, and the index spot price is 965. If interest rates are 0.5% per month, what is the Call Payoff?
- A$2.64
- B$12.00
- C$12.36
- D$15.00
13The premium on a call option on the market index with an exercise price of 1050 is $9.30 when originally purchased. After 2 months the position is closed, and the index spot price is 1072. If interest rates are 0.5% per month, what is the Call Profit?
- A$9.30
- B$9.39
- C$12.61
- D$22.00
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- Description
- Quiz on Untitled, created by Beatriz Peregrina Viñolo on 24/11/2014.
- Author
- Beatriz Peregrina Viñolo
- Language
- Español
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