(A) –$20
(B) $0
(C) $1
(D) $20
Category: Finance Mcqs
If market price of the share at expiration is $100 and exercise price is $80, then value of a call option at expiration is
(A) –$20
(B) $0
(C) $1
(D) $20
Option value at expiration is a function of:
(I) interest rate
(II) volatility
(III) stock price
(IV) exercise price
(A) I only
(B) III only
(C) I and II
(D) III and IV
Difference between strike price and stock price is called
(A) intrinsic value
(B) option premium
(C) time premium
(D) none of these
If the co-variance between stock A and market returns is 12, and the standard deviation of market returns is 3 then what is the value of beta?
(A) 0.96
(B) 1.0
(C) 1.33
(D) 1.45
The return that is forgone by investing in the project rather than investing in financial markets at the same level of risk is called
(A) internal rate of return
(B) capital saving
(C) opportunity cost
(D) opportunity saving
The party that agrees to buy the underlying asset in a forward contract is said to assumes
(A) forward position
(B) backward position
(C) long position
(D) short position
The party that agrees to sell the underlying asset in a forward contract is said to assumes
(A) forward position
(B) backward position
(C) long position
(D) short position
If the spot price is $1200 and the exercise price is $1000 then the payoff of a party assuming a long position is
(A) -$200
(B) $0
(C) $1
(D) $200
If the spot price is $1200 and the exercise price is $1000 then the payoff of a party assuming a short position is
(A) –$200
(B) $0
(C) $1
(D) $200