Reference no: EM132794572
Question 1: Each listed stock option contract gives the holder the right to buy or sell __________ shares of stock.
Multiple Choice
a) 1
b) 10
c) 100
d) 1,000
Question 2: A put option on Dr. Pepper Snapple Group, Inc., has an exercise price of $45. The current stock price is $41. The put option is _________.
Multiple Choice
a) at the money
b) in the money
c) out of the money
d) knocked out
Question 3: The maximum loss a buyer of a stock call option can suffer is the _________.
Multiple Choice
a) call premium
b) stock price
c) stock price minus the value of the call
d) strike price minus the stock price
Question 4: The potential loss for a writer of a naked call option on a stock is _________.
Multiple Choice
a) equal to the call premium
b) larger the lower the stock price
c) limited
d) unlimited
Question 5: A writer of a call option will want the value of the underlying asset to __________, and a buyer of a put option will want the value of the underlying asset to _________.
Multiple Choice
a) decrease; decrease
b) decrease; increase
c) increase; decrease
d) increase; increase