Corporate FinanceBerk DeMarzo Test Bank Chapter 20.docx

Corporate FinanceBerk DeMarzo Test Bank Chapter 20.docx

《Corporate FinanceBerk DeMarzo Test Bank Chapter 20.docx》由会员分享，可在线阅读，更多相关《Corporate FinanceBerk DeMarzo Test Bank Chapter 20.docx（29页珍藏版）》请在冰豆网上搜索。

CorporateFinanceBerkDeMarzoTestBankChapter20

CorporateFinance,3e（Berk/DeMarzo）

Chapter20FinancialOptions

20.1OptionBasics

1）WhichofthefollowingstatementsisFALSE?

A）Acalloptiongivestheownertherighttobuytheasset.

B）Aputoptiongivestheownertherighttoselltheasset.

C）Afinancialoptioncontractgivesthewritertheright（butnottheobligation）topurchaseorsellanassetatafixedpriceatsomefuturedate.

D）Astockoptiongivestheholdertheoptiontobuyorsellashareofstockonorbeforeagivendateforagivenprice.

Answer:

C

Explanation:

C）Afinancialoptioncontractgivestheownertheright（butnottheobligation）topurchaseorsellanassetatafixedpriceatsomefuturedate.

Diff:

1

Section:

20.1OptionBasics

Skill:

Conceptual

2）WhichofthefollowingstatementsisFALSE?

A）Whenaholderofanoptionenforcestheagreementandbuysorsellsashareofstockattheagreed-uponprice,heisexercisingtheoption.

B）Therearetwokindsofoptions.Europeanoptionsallowtheirholderstoexercisetheoptiononanydateuptoandincludingafinaldatecalledtheexpirationdate.

C）Becauseanoptionisacontractbetweentwoparties,foreveryownerofafinancialoption,thereisalsoanoptionwriter,thepersonwhotakestheothersideofthecontract.

D）Thepriceatwhichtheholderbuysorsellstheshareofstockwhentheoptionisexercisediscalledthestrikepriceorexerciseprice.

Answer:

B

Explanation:

B）Therearetwokindsofoptions.Americanoptionsallowtheirholderstoexercisetheoptiononanydateuptoandincludingafinaldatecalledtheexpirationdate.

Diff:

1

Section:

20.1OptionBasics

Skill:

Conceptual

3）WhichofthefollowingstatementsisFALSE?

A）Theoptionbuyer,alsocalledtheoptionholder,holdstherighttoexercisetheoptionandhasalongpositioninthecontract.

B）Themarketpriceoftheoptionisalsocalledtheexerciseprice.

C）Ifthepayofffromexercisinganoptionimmediatelyispositive,theoptionissaidtobein-the-money.

D）Aswithotherfinancialassets,optionscanbeboughtandsold.Standardstockoptionsaretradedonorganizedexchanges,whilemorespecializedoptionsaresoldthroughdealers.

Answer:

B

Explanation:

B）Themarketpriceoftheoptionisalsocalledtheoptionpremium.

Diff:

2

Section:

20.1OptionBasics

Skill:

Conceptual

4）WhichofthefollowingstatementsisFALSE?

A）Aholderwouldnotexerciseanin-the-moneyoption.

B）Theoptionseller,alsocalledtheoptionwriter,sells（orwrites）theoptionandhasashortpositioninthecontract.

C）Becausethelongsidehastheoptiontoexercise,theshortsidehasanobligationtofulfillthecontract.

D）Whentheexercisepriceofanoptionisequaltothecurrentpriceofthestock,theoptionissaidtobeat-the-money.

Answer:

A

Explanation:

A）Aholderwouldnotexerciseanout-of-the-moneyoption.

Diff:

2

Section:

20.1OptionBasics

Skill:

Conceptual

5）WhichofthefollowingstatementsisFALSE?

A）Optionsalsoallowinvestorstospeculate,orplaceabetonthedirectioninwhichtheybelievethemarketislikelytomove.

B）Optionswherethestrikepriceandthestockpriceareveryfarapartarereferredtoasdeepin-the-moneyordeepoutof-the-money.

C）Calloptionswithstrikepricesabovethecurrentstockpricearein-the-money,asareputoptionswithstrikepricesbelowthecurrentstockprice.

D）Europeanoptionsallowtheirholderstoexercisetheoptiononlyontheexpirationdate—holderscannotexercisebeforetheexpirationdate.

Answer:

C

Explanation:

C）Calloptionswithstrikepricesbelowthecurrentstockpricearein-themoney,asareputoptionswithstrikepricesabovethecurrentstockprice.

Diff:

2

Section:

20.1OptionBasics

Skill:

Conceptual

6）Thewriterofacalloptionhas:

A）theobligationtosellasecurityforagivenprice.

B）theobligationtobuyasecurityforagivenprice.

C）therighttosellasecurityforagivenprice.

D）therighttobuyasecurityforagivenprice.

Answer:

A

Diff:

1

Section:

20.1OptionBasics

Skill:

Definition

7）Theholderofaputoptionhas:

A）theobligationtosellasecurityforagivenprice.

B）therighttobuyasecurityforagivenprice.

C）therighttosellasecurityforagivenprice.

D）theobligationtobuyasecurityforagivenprice.

Answer:

C

Diff:

1

Section:

20.1OptionBasics

Skill:

Definition

8）Usingoptionstoreduceriskiscalled:

A）speculation.

B）anakedposition.

C）hedging.

D）acoveredposition.

Answer:

C

Diff:

1

Section:

20.1OptionBasics

Skill:

Definition

9）Usingoptionstoplaceabetonthedirectioninwhichyoubelievethemarketislikelytomoveiscalled:

A）speculation.

B）hedging.

C）acoveredposition.

D）anakedposition.

Answer:

A

Diff:

1

Section:

20.1OptionBasics

Skill:

Definition

Usethetableforthequestion（s）below.

ConsiderthefollowinginformationonoptionsfromtheCBOEforMerck:

10）Assumeyouwanttobuyoneoptioncontractthatwithanexercisepriceclosesttobeingat-the-moneyandthatexpiresJanuary2009.Thecurrentpricethatyouwouldhavetopayforsuchacontractis:

A）$680

B）$380

C）$650

D）$420

Answer:

A

Explanation:

A）Onecontractisfor100shares.Theoptionclosesttobeingatthemoneyhasanexercisepriceof$40.00andcurrentlyhasanaskpriceof$6.80.Sinceyouarebuyingtheoption,youwillhavetopaytheaskprice.So$6.80×100sharespercontract=$680

Diff:

2

Section:

20.1OptionBasics

Skill:

Analytical

11）TheopeninterestforJanuary2009putoptionthatisclosesttobeingat-the-moneyis:

A）7174

B）982

C）319

D）8422

Answer:

A

Diff:

2

Section:

20.1OptionBasics

Skill:

Analytical

12）HowmanyoftheJanuary2009putoptionsareinthemoney?

A）1

B）3

C）2

D）4

Answer:

C

Explanation:

C）Foraputoptiontobeinthemoney,itscurrentstockpricemustbelessthantheexerciseprice.ThecurrentstockpriceforMerckis$41.95,soonlytheputoptionswithstrikepricesof$45.00and$50.00areinthemoney.Sotherearetwoputoptionsinthemoney.

Diff:

1

Section:

20.1OptionBasics

Skill:

Analytical

13）HowmanyoftheJanuary2009calloptionsareinthemoney?

A）2

B）4

C）1

D）3

Answer:

B

Explanation:

B）Foracalloptiontobeinthemoney,itscurrentstockpricemustbegreaterthantheexerciseprice.ThecurrentstockpriceforMerckis$41.95,sothecalloptionswithstrikepricesof$25.00,$30.00,$35.00,and$40.00areinthemoney.Sotherearefourcalloptionsinthemoney.

Diff:

1

Section:

20.1OptionBasics

Skill:

Analytical

14）Themarketpriceofanoptioniscalledthe:

A）Americanpremium.

B）Europeanpremium.

C）optionpremium.

D）exercisingpremium.

Answer:

C

Diff:

1

Section:

20.1OptionBasics

Skill:

Definition

15）Asthesellerofanoption,youreceivethe:

A）exerciseprice.

B）strikeprice.

C）riskpremium.

D）optionpremium.

Answer:

D

Diff:

1

Section:

20.1OptionBasics

Skill:

Definition

Usethetableforthequestion（s）below.

ConsiderthefollowinginformationonoptionsfromtheCBOEforMerck:

16）Youhavedecidedtosell（write）5January2009putoptionsonMerckwithanexercisepriceof$45pershare.Howmuchmoneywillyoureceiveandarethesecontractsinoroutofthemoney?

Answer:

Ifyouwrite5putoptioncontractsyouwillreceive5×100（sharespercontract）×$5.90（sinceyouaresellingyougetbidprice）=$2,950.Theseoptionsareinthemoneysincetheexercisepriceisgreaterthanthecurrentmarketprice.

Diff:

2

Section:

20.1OptionBasics

Skill:

Analytical

17）Youhavedecidedtobuy10January2009calloptionsonMerckwithanexercisepriceof$45pershare.Howmuchwillthistransactioncostyouandarethesecontractsinoroutofthemoney?

Answer:

Ifyoubuy10calloptioncontractsyouwillpay10×100（sharespercontract）×$4.50（sinceyouarebuyingyoupaytheaskprice）=$4,500.Theseoptionsareoutofthemoneysincetheexercisepriceisgreaterthanthecurrentmarketprice.

Diff:

2

Section:

20.1OptionBasics

Skill:

Analytical

20.2OptionPayoffsatExpiration

1）Thepayofftotheholderofacalloptionisgivenby:

A）C=max（S-K,0）

B）C=min（K,0）

C）C=max（K-S,0）

D）C=min（K-S,0）

Answer:

A

Diff:

1

Section:

20.2OptionPayoffsatExpiration

Skill:

Conceptual

2）Thepayofftotheholderofaputoptionisgivenby:

A）P=max（K-S,0）

B）P=max（S-K,0）

C）P=min（S-K,0）

D）P=max（K,0）

Answer:

A

Diff:

1

Section:

20.2OptionPayoffsatExpiration

Skill:

Conceptual

Usethefigureforthequestion（s）below.

3）Thisgraphdepictsthepayoffsof:

A）ashortpositioninaputoptionatexpiration.

B）ashortpositioninacalloptionatexpiration.

C）alongpositioninaputoptionatexpiration.

D）alongpositioninacalloptionatexpiration.

Answer:

B

Diff:

1

Section:

20.2OptionPayoffsatExpiration

Skill:

Conceptual

Usethefigureforthequestion（s）below.

4）Thisgraphdepictsthepayoffsof:

A）alongpositioninaputoptionatexpiration.

B）ashortpositioninacalloptionatexpiration.

C）ashortpositioninaputoptionatexpiration.

D）alongpositioninacalloptionatexpiration.

Answer:

A

Diff:

1

Section:

20.2OptionPayoffsatExpiration

Skill:

Conceptual

5）Anoptionstrategyinwhichyouholdalongpositioninbothaputandacalloptionwiththesamestrikepriceiscalled:

A）astrangle.

B）portfolioinsurance.

C）abutterflyspread.

D）astraddle.

Answer:

D

Diff:

2

Section:

20.2OptionPayoffsatExpiration

Skill:

Definition

6）WhichofthefollowingstatementsisFALSE?

A）Becauseashortpositioninanoptionistheothersideofalongposition,theprofitsfromashortpositio