Investments Chap. 14
Which one of the following was the first listed exchange for stock options in the United States?
Chicago Board Options Exchange
ETF options are settled in
ETF shares.
LEAPS is an acronym for
Long-Term Equity Anticipation Securities.
Which one of the following statements concerning options is correct?
Option holders can profit on movements of the price of the underlying security.
Which of the following is true about rights?
They are a type of short-lived call option.
Writers of option contracts
earn a profit when the option expires without being exercised.
Purchasers of stock options
have the right to buy or sell a certain number of underlying shares.
A long straddle
is a strategy that produces profits when the price of the underlying security moves significantly in either direction.
The premium on a stock index call would be expected to increase as the
market becomes more volatile.
The most important factor affecting the market price of a put or call is the
price behavior of the underlying common stock.
In nearly all cases, the purpose of a hedge is to
reduce or eliminate risk.
The writer of a put option hopes that the price of the underlying stock will rise because
the option is less likely to be exercised.
An American call option gives the owner
the right but not the obligation to buy the stock at the strike price on or before the expiration date.
