Multiple Choice
1. A person who buys an option may do any of the following except
a. extend it.
b. exercise it.
c. sell it.
d. allow it to expire.
2. An option whose striking price is above the stock price is
a. out-of-the-money.
b. in-the-money.
c. at-the-money.
d. cannot be determined.
3. An option that has intrinsic value is
a. in-the-money.
b. out-of-the-money.
c. at-the-money.
d. worthless.
4. All of the following are true except
a. an in-the-money option has intrinsic value.
b. an out-of-the-money option is worthless.
c. an at-the-money option has no intrinsic value.
d. an out-of-the-money option has no intrinsic value.
5. All of the following are true except
a. the higher the striking price, the greater the value of a put option.
b. the higher the striking price, the greater the value of a call option.
c. the higher the stock price, the greater the value of a call option.
d. the lower the stock price, the greater the value of a put option.
6. The number of options in existence at a time is measured by
a. open interest.
b. volume.
c. volume minus open interest.
d. open interest minus volume.
7. Which of the following is not possible?
a. volume 110, open interest 100
b. volume 100, open interest 110
c. volume 0, open interest 100
d. volume 0, open interest – 100
8. The guarantor of option trades is the ______________.
a. SEC
b. OCC
c. CFTC
d. FDIC
9. Options trade on all of the following except the _____________________.
a. American Stock Exchange
b. New York Stock Exchange
c. Philadelphia Stock Exchange
d. Pacific Stock Exchange
10. The newest U.S. options exchange is the __________________.
a. National Stock Exchange
b. American Stock Exchange
c. International Stock Exchange
d. Global Stock Exchange
11. A LEAP is a(n)
a. commodity option.
b. gold or silver option.
c. long-term option.
d. option with a high striking price.
12. An option that is not fungible is most likely
a. an over-the-counter option.
b. traded at the CBOE.
c. listed.
d. about to expire.