financial options and applications in corporate finance

MCQsQuestion.com has 21 Question/Answers about Topic financial options and applications in corporate finance

Yield on Treasury bill with a maturity is classified as a risk free rate but must be equal to an

Yield on Treasury bill with a maturity is classified as a risk free rate but must be equal to an
  • A. option closing price
  • B. option beginning price
  • C. option expiration
  • D. option model
  • Correct Answer: Option C

Type of options that do not have stock in portfolio to back up options is classified as

Type of options that do not have stock in portfolio to back up options is classified as
  • A. undue options
  • B. due options
  • C. naked options
  • D. total options
  • Correct Answer: Option C

An option which can be exercised any desired time before an expiry date is classified as

An option which can be exercised any desired time before an expiry date is classified as
  • A. Australian option
  • B. money option
  • C. European option
  • D. American option
  • Correct Answer: Option D

Sellers of options in financial markets are classified as

Sellers of options in financial markets are classified as
  • A. expiry writer
  • B. option writer
  • C. contract writer
  • D. bond writer
  • Correct Answer: Option B

Value of option which is considered as its worth as soon as it is expired is classified as

Value of option which is considered as its worth as soon as it is expired is classified as
  • A. minimum option value
  • B. minimum value
  • C. maximum value
  • D. exercise value
  • Correct Answer: Option D

Present value of portfolio $850 and current option price $1620 then value of stock included in portfolio would be

Present value of portfolio $850 and current option price $1620 then value of stock included in portfolio would be
  • A. 1.90%
  • B. 1.90 times
  • C. $770
  • D. $2,470
  • Correct Answer: Option C

An excess of actual price of option over an exercise value of option is classified as

An excess of actual price of option over an exercise value of option is classified as
  • A. time value options
  • B. actual options
  • C. estimated options
  • D. optional pricing
  • Correct Answer: Option A

An option that gives investors right to sell a stock at predefined price is classified as

An option that gives investors right to sell a stock at predefined price is classified as
  • A. put option
  • B. call option
  • C. money back options
  • D. out of money options
  • Correct Answer: Option A

Type of option which cannot be exercised before an expiry date which is classified as

Type of option which cannot be exercised before an expiry date which is classified as
  • A. European option
  • B. American option
  • C. Australian option
  • D. money option
  • Correct Answer: Option A

According to Black Scholes model, stocks with call option pays the

According to Black Scholes model, stocks with call option pays the
  • A. dividends
  • B. no dividends
  • C. current price
  • D. past price
  • Correct Answer: Option B

According to Black Scholes model, trading of securities and stock prices moves respectively

According to Black Scholes model, trading of securities and stock prices moves respectively
  • A. constant and randomly
  • B. randomly and constant
  • C. randomly and continuously
  • D. continuously and randomly
  • Correct Answer: Option D

Stock option is considered more valuable in situation when stock have

Stock option is considered more valuable in situation when stock have
  • A. price hike in market
  • B. market stability
  • C. not volatile
  • D. highly volatile
  • Correct Answer: Option D

Stock option is more worthwhile if it is

Stock option is more worthwhile if it is
  • A. extremely volatile
  • B. less volatile
  • C. stable stock
  • D. unstable price stock
  • Correct Answer: Option A

Movement of price or rise or fall of prices of options is classified as

Movement of price or rise or fall of prices of options is classified as
  • A. option lattice
  • B. pricing movement
  • C. price change
  • D. binomial lattice
  • Correct Answer: Option D

If stock market price is higher than strike price so call option

If stock market price is higher than strike price so call option
  • A. price will be lower
  • B. rate will be higher
  • C. price will be higher
  • D. rate will be lower
  • Correct Answer: Option C
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