Test Bank For Options, Futures, And Other Derivatives, 8th Edition

Test Bank For Options, Futures, And Other Derivatives, 8th Edition simplifies your exam prep with detailed solutions and a wide range of test questions.

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Test Bank: Chapter 1Introduction1.List three types of traders in futures, forward, and options marketsi._ _ _ _ _ _ _ _ii._ _ _ _ _ _ _ _iii._ _ _ _ _ _ _ _2.Which of the following isnottrue (circle one)a.When a CBOEcalloption on IBM is exercised, IBM issues more stockb.An American option can be exercised at any time during its lifec.An call option will always be exercised at maturity if the underlyingasset price is greater than the strike priced.A put option will always be exercised at maturity if the strike price isgreater than the underlying asset price.3.A trader enters into a one-year short forward contract to sell an asset for $60when the spot price is $58. The spot price in one year proves to be $63. What isthe trader’s gain or loss?Show a dollar amount and indicate whether it is a gain ora loss._ _ _ _ _ __ _ _ _4.A trader buys 100 European call options(i.e., one contract)with a strike price of$20 and a time to maturity of one year. The cost of each option is $2. The price ofthe underlying asset proves to be $25 in one year. Whatis the trader’s gain orloss?Show a dollar amount and indicate whether it is a gain or a loss._ _ _ _ _ __ _ _ _5.A trader sells 100 European put options(i.e., one contract)with a strike price of$50 and a time to maturity of six months. The price received for each option is $4.The price of the underlying asset is $41 in six months. Whatis the trader’s gain orloss?Show a dollar amount and indicate whether it is a gain or a loss._ _ _ _ _ __ _ _ _6.The price of a stock is $36 and the price of a three-month call option on the stockwith a strike price of $36 is $3.60. Suppose a trader has $3,600 to invest and istrying to choose between buying 1,000 options and 100 shares of stock. How highdoes the stock price have to rise for an investment in options to lead to the sameprofitas an investment in the stock?_ _ _ _ _ _

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Options, Futures, And Other Derivat...

Test Bank For Options, Futures, And Other Derivatives, 8th Edition

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