chapter 3

Beatriz Peregrina Viñolo
Quiz by Beatriz Peregrina Viñolo, updated more than 1 year ago
Beatriz Peregrina Viñolo
Created by Beatriz Peregrina Viñolo over 6 years ago
1013
1

Description

Quiz on chapter 3, created by Beatriz Peregrina Viñolo on 11/26/2014.

Resource summary

Question 1

Question
A 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?
Answer
  • $20.00 gain
  • $18.65 gain
  • $36.29 loss
  • $43.76 loss

Question 2

Question
A 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.
Answer
  • $45.21 loss
  • $21.22 loss
  • $18.00 gain
  • $24.25 gain

Question 3

Question
A 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.
Answer
  • $3.45 gain
  • $1.45 gain
  • $2.80 loss
  • $1.36 loss

Question 4

Question
A 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?
Answer
  • $42.47
  • $45.26
  • $47.67
  • $49.55

Question 5

Question
A 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).
Answer
  • $0
  • $23.67 loss
  • $26.79 gain
  • $28.50 gain

Question 6

Question
A 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)?
Answer
  • $802.12
  • $830.00
  • $855.21
  • $866.32

Question 7

Question
At 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.
Answer
  • $802.12
  • $830.00
  • $855.21
  • $866.32

Question 8

Question
The $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.
Answer
  • $822.67
  • $824.79
  • $830.76
  • $875.82

Question 9

Question
What 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.
Answer
  • $6.80
  • $7.68
  • $9.24
  • $12.32

Question 10

Question
What 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.
Answer
  • $6.80
  • $7.68
  • $9.24
  • $12.32

Question 11

Question
What 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.
Answer
  • $832.82
  • $842.32
  • $852.22
  • $862.92

Question 12

Question
The 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.
Answer
  • $0
  • $1,000
  • $5,000
  • $6,020

Question 13

Question
Using 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.
Answer
  • $180,000
  • $217,500
  • $220,000
  • $222,500

Question 14

Question
An 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?
Answer
  • $1.21 loss
  • $1.50 loss
  • $0.54 gain
  • $1.65 gain
Show full summary Hide full summary

Similar

Geology Flashcards
itzel.jm
Part 1 Chapter 3 Fundamentals of WANs
Wagner Ramirez
Chapter 3. Amazon Simple StorageService and Amazon Glacier Storage
Rubén Fuentes González
AS Media Studies Terminology
Mourad
seis procesos de la ARH. Administración de Recursos Humanos
Yery Takigawa Guzmán
Modelos de empresas
Norma Flores
Cómo crear un Mapa Mental
Diana Mauren GUILLEN GARZON
BASES EPISTEMOLÓGICAS
LAREN DOMINGUEZ
FICHAS ETICA
JANIS LILIANA BAUTISTA
New GCSE Maths
Brigitte Bunge