Eartheral Mandental Prolilormial
Question 1 Before expiration, the time value of an in the money call option is always
Answer
equal to zero. positive. negative. equal to the stock price minus the exercise price. None of these is correct.
1 points
Question 2 The intrinsic value of an out-of-the-money put option is equal to
Answer
the stock price minus the exercise price. the put premium. zero. the exercise price minus the stock price. None of these is correct.
1 points
Question 3 Use the Black-Scholes Option Pricing Model for the following problem. Given: SO= $70; X = $70; T = 70 days; r = 0.06 annually (0.0001648 daily); σ = 0.020506 (daily). No dividends will be paid before option expires. The value of the call option is _______.
Answer
$10.16 $5.16 $0.00 $2.16 None of these is correct
1 points
Question 4 Ceteris paribus, the price and yield on a bond are
Answer
positively related. negatively related. sometimes positively and sometimes negatively related. not related. indefinitely related.
1 points
Question 5 If a 6% coupon bond is trading for $950.00, it has a current yield of ____________ percent.
Answer
6.5 6.3 6.1 6.0 6.6
1 points
Question 6 SIVs raise funds by ______ and then use the proceeds to ______.
Answer
issuing short-term commercial paper; retire other forms of their debt issuing short-term commercial paper; buy other forms of debt such as mortgages issuing long-term bonds; retire other forms of their debt issuing long-term bonds; buy other forms of debt such as mortgages issuing short-term commercial paper; retire other forms of their debt and issuing long-term bonds; buy other forms of debt such as mortgages
1 points
Question 7 Treasury STRIPS are
Answer
securities issued by the Treasury with very long maturities. extremely risky securities. created by selling each coupon or principal payment from a whole Treasury bond as
Answer
equal to zero. positive. negative. equal to the stock price minus the exercise price. None of these is correct.
1 points
Question 2 The intrinsic value of an out-of-the-money put option is equal to
Answer
the stock price minus the exercise price. the put premium. zero. the exercise price minus the stock price. None of these is correct.
1 points
Question 3 Use the Black-Scholes Option Pricing Model for the following problem. Given: SO= $70; X = $70; T = 70 days; r = 0.06 annually (0.0001648 daily); σ = 0.020506 (daily). No dividends will be paid before option expires. The value of the call option is _______.
Answer
$10.16 $5.16 $0.00 $2.16 None of these is correct
1 points
Question 4 Ceteris paribus, the price and yield on a bond are
Answer
positively related. negatively related. sometimes positively and sometimes negatively related. not related. indefinitely related.
1 points
Question 5 If a 6% coupon bond is trading for $950.00, it has a current yield of ____________ percent.
Answer
6.5 6.3 6.1 6.0 6.6
1 points
Question 6 SIVs raise funds by ______ and then use the proceeds to ______.
Answer
issuing short-term commercial paper; retire other forms of their debt issuing short-term commercial paper; buy other forms of debt such as mortgages issuing long-term bonds; retire other forms of their debt issuing long-term bonds; buy other forms of debt such as mortgages issuing short-term commercial paper; retire other forms of their debt and issuing long-term bonds; buy other forms of debt such as mortgages
1 points
Question 7 Treasury STRIPS are
Answer
securities issued by the Treasury with very long maturities. extremely risky securities. created by selling each coupon or principal payment from a whole Treasury bond as