Which of the following
causes the futures price of an asset to decrease, everything else held
O A. Lower income
received while holding the underlying asset.
O B. Higher expected
spot price for the underlying asset.
O C. Longer the time to
maturity of the futures contract.
D. Higher risk-free rate of interest.
A put option with a
strike price of Â£32 can be bought for Â£6. What will be your net profit if you
exercise this put option and the stock price is Â£22 at maturity?
O A. Â£4.00
O C. Â£8.00
Suppose you buy a put and short sell one
share. What is your cash payoff when the option expires? (Ignore the costs of
the option and the share). X is the strike price and ST is the price of the
share at time to maturity.
O A. Receive -(ST-X) if
ST < X and receive X if ST > X.
O B. Receive Stif ST < X and receive
-(ST-X) if ST > X.
O C. Receive Stif ST < X and receive X if
ST > X.
O D. Receive X if ST < X and receive -ST if
St > X.
Based on the profit and
loss profile of a long European call option, the writer will experience
O A. Limited losses but
O B. Unlimited losses
but limited profits.
O C. Limited losses and
O D. Unlimited losses
and unlimited profits