Quiz
chapter 3
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Questions in this quiz (14)
1A strategy consists of buying a market index product at $830 and longing a put on the index with a strike of $830. If the put premium is $18.00 and interest rates are 0.5% per month, what is the profit or loss at expiration (in 6 months) if the market index is $810?
- A$20.00 gain
- B$18.65 gain
- C$36.29 loss
- D$43.76 loss
2A strategy consists of buying a market index product at $830 and longing a put on the index with a strike of $830. If the put premium is $18.00 and interest rates are 0.5% per month, compute the profit or loss from the long index position by itself expiration (in 6 months) if the market index is $810.
- A$45.21 loss
- B$21.22 loss
- C$18.00 gain
- D$24.25 gain
3A strategy consists of buying a market index product at $830 and longing a put on the index with a strike of $830. If the put premium is $18.00 and interest rates are 0.5% per month, compute the profit or loss from the long put position by itself (in 6 months) if the market index is $810.
- A$3.45 gain
- B$1.45 gain
- C$2.80 loss
- D$1.36 loss
4A strategy consists of buying a market index product at $830 and longing a put on the index with a strike of $830. If the put premium is $18.00 and interest rates are 0.5% per month, what is the estimated price of a call option with an exercise price of $830?
- A$42.47
- B$45.26
- C$47.67
- D$49.55
5A strategy consists of longing a put on the market index with a strike of 830 and shorting a call option on the market index with a strike price of 830. The put premium is $18.00 and the call premium is $44.00. Interest rates are 0.5% per month. Determine the net profit or loss if the index price at expiration is $830 (in 6 months).
- A$0
- B$23.67 loss
- C$26.79 gain
- D$28.50 gain
6A strategy consists of longing a put on the market index with a strike of 830 and shorting a call option on the market index with a strike price of 830. The put premium is $18.00 and the call premium is $44.00. Interest rates are 0.5% per month. What is the breakeven price of the market index for this strategy at expiration (in 6 months)?
- A$802.12
- B$830.00
- C$855.21
- D$866.32
7At the 6-month point, what is the breakeven index price for a strategy of longing the market index at a price of 830? Interest rates are 0.5% per month.
- A$802.12
- B$830.00
- C$855.21
- D$866.32
8The $850 strike put premium is $25.45 and the $850 strike call is selling for $30.51. Calculate the breakeven index price for a strategy employing a short call and long put that expires in 6 months. Interest rates are 0.5% per month.
- A$822.67
- B$824.79
- C$830.76
- D$875.82
9What is the maximum profit that an investor can obtain from a strategy employing a long 830 call and a short 850 call over 6 months? Interest rates are 0.5% per month.
- A$6.80
- B$7.68
- C$9.24
- D$12.32
10What is the maximum loss that an investor can obtain over 6 months from a strategy employing a long 830 call and a short 850 call? Interest rates are 0.5% per month.
- A$6.80
- B$7.68
- C$9.24
- D$12.32
11What is the breakeven point that an investor can obtain from a 6-month strategy employing a long 830 call and a short 850 call? Interest rates are 0.5% per month.
- A $832.82
- B$842.32
- C$852.22
- D$862.92
12The owner of a house worth $180,000 purchases an insurance policy at the beginning of the year for a price of $1,000. The deductible on the policy is $5,000. If after 6 months the homeowner experiences a casualty loss valued at $45,000, what is the homeowner's net gain/loss? Assume an opportunity cost of capital of 4.0% annually.
- A$0
- B$1,000
- C$5,000
- D$6,020
13Using option strategy concepts, what is the value of an insured home, if the value of the uninsured home is $220,000, the house was purchased for $180,000 and the house has a casualty policy costing $500 with a $2,000 deductible? Ignore interest costs.
- A$180,000
- B$217,500
- C$220,000
- D$222,500
14An investor purchases a call option with an exercise price of $55 for $2.60. The same investor sells a call on the same security with an exercise price of $60 for $1.40. At expiration, 3 months later, the stock price is $56.75. All other things being equal and given an annual interest rate of 4.0%, what is the net profit or loss to the investor?
- A$1.21 loss
- B$1.50 loss
- C$0.54 gain
- D$1.65 gain
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- Quiz on chapter 3, created by Beatriz Peregrina Viñolo on 26/11/2014.
- Author
- Beatriz Peregrina Viñolo
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- Español
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