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Question 1 of 19
1. Question
Which of the following does not affect price of an option?
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Question 2 of 19
2. Question
Maria, has an American call option with strike price of $55 on stock ABC. Stock ABC has a buy rating from major brokers and is currently trading at $40. Assuming riskfree rate of 8% and stock paying no dividends, when should Maria exercise this call option?
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Question 3 of 19
3. Question
“In comparison to exchange traded options, ESOPs are exercised earlier”.
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Question 4 of 19
4. Question
Consider a call option call with $45 as strike price trading at $10 for a stock ABC currently trading at $55. What should be the price of a $75 call option for the same stock in comparison to $45 call option, keeping all other things constant?
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Question 5 of 19
5. Question
We have two American call options with 2 months and 5 months to expiration. Assuming a dividend is expected to be paid in 4 months, we can say that 5 months expiry call option will be worth more than 2 months expiry call option, due to higher chances of being ITM.
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Question 6 of 19
6. Question
Using the above question, we can say that price of 5month to expiry put option will decrease as well due to dividend payout same as of call option?
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Question 7 of 19
7. Question
Which of the following factors does not affect price of a European Put option?
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Question 8 of 19
8. Question
A call option of strike price of $1050 with 1month maturity cannot have a price of:
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Question 9 of 19
9. Question
If we have a European put option with strike price of $1050 and expiration. Assuming riskfree rate of 5% per year, this put option can have a maximum price of:
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Question 10 of 19
10. Question
In case of an American put option with same strike price and expiration, what can be maximum price of that option:
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Question 11 of 19
11. Question
What is the minimum price of the similar American put option used above?
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Question 12 of 19
12. Question
Read the following information and use this to answer questions below:
A stock ABC is currently trading $45. We have a European call option on stock worth $12 for strike price of $50 with a maturity of 3 months. The European put of same strike price & maturity trade at $5 price. Assume riskfree rate to be 6% pa continuously compounded a nondividend paying stock.
(1). Using put call parity, determine if any arbitrage opportunities exist. If yes, what actions should be taken:
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Question 13 of 19
13. Question
Read the following information and use this to answer questions below:
A stock ABC is currently trading $45. We have a European call option on stock worth $12 for strike price of $50 with a maturity of 3 months. The European put of same strike price & maturity trade at $5 price. Assume riskfree rate to be 6% pa continuously compounded a nondividend paying stock.
(2) For the above position created for arbitrage, what will be the outlay of position:
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Question 14 of 19
14. Question
Read the following information and use this to answer questions below:
A stock ABC is currently trading $45. We have a European call option on stock worth $4 for strike price of $50 with a maturity of 4 months. The European put of same strike price & maturity trade at $11 price. Assume riskfree rate to be 6% pa continuously compounded a dividend of $2is expected to be paid in 3 months
1) Using put call parity, determine if any arbitrage opportunities exist. If yes, what actions should be taken:
CorrectIncorrect 
Question 15 of 19
15. Question
Read the following information and use this to answer questions below:
A stock ABC is currently trading $45. We have a European call option on stock worth $4 for strike price of $50 with a maturity of 4 months. The European put of same strike price & maturity trade at $11 price. Assume riskfree rate to be 6% pa continuously compounded a dividend of $2is expected to be paid in 3 months
2) For the above position created for arbitrage, what will be the inlay of position:
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Question 16 of 19
16. Question
The primary advantage of using forward prices in put call parity eliminates the need for estimation of ______________.
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Question 17 of 19
17. Question
“An ITM American call option on an nondividend paying stock is always greater than its intrinsic value”.
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Question 18 of 19
18. Question
The current price of a nondividend paying stock is $550. Price of a 4month put option is $55 for strike price of $600. Determine price of a 4month call option with same strike price and maturity. Assume riskfree rate as 6% yearly continuously compounded and no arbitrage opportunities exists.
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Question 19 of 19
19. Question
Using forward prices, which of the following helps to make the price of a European call option be equal to European put price on the same underlying asset with same strike price and time to expiration.
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