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Fin 533 Chapter 21 Questions and Correct
Answers/ Latest Update / Already Graded
1) Before expiration, the time value of an in-the-money call option is
always
A) equal to zero. B) positive. C) negative. D) equal to the stock price
minus the exercise price. E) None of the options are correct.
Ans: B
2) Before expiration, the time value of an in-the-money put option is
always
A) equal to zero. B) negative. C) positive. D) equal to the stock price
minus the exercise price. E) None of the options are correct.
Ans: C
3) Before expiration, the time value of an at-the-money call option is
usually
A) positive. B) equal to zero. C) negative. D) equal to the stock price
minus the exercise price. E) None of the options are correct.
Ans: A
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4) Before expiration, the time value of an at-the-money put option is
always
A) equal to zero. B) equal to the stock price minus the exercise price. C)
negative. D) positive. E) None of the options are correct.
Ans: D
5) At expiration, the time value of an in-the-money call option is always
A) equal to zero. B) positive. C) negative. D) equal to the stock price
minus the exercise price. E) None of the options are correct.
Ans: A
6) At expiration, the time value of an in-the-money put option is always
A) equal to zero. B) negative. C) positive. D) equal to the stock price
minus the exercise price. E) None of the options are correct.
Ans: A
7) At expiration, the time value of an at-the-money call option is always
A) positive. B) equal to zero. C) negative. D) equal to the stock price
minus the exercise price.
Ans: B
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8) At expiration, the time value of an at-the-money put option is
always
A) equal to zero. B) equal to the stock price minus the exercise price. C)
negative. D) positive.
Ans: A
9) A call option has an intrinsic value of zero if the option is
A) at the money. B) out of the money. C) in the money. D) at the
money and in the money. E) at the money or out of the money.
Ans: E
10) A put option has an intrinsic value of zero if the option is
A) at the money. B) out of the money. C) in the money. D) at the
money and in the money. E) at the money or out of the money.
Ans: E
11) Prior to expiration,
A) the intrinsic value of a call option is greater than its actual value. B)
the intrinsic value of a call option is always positive. C) the actual value
of a call option is greater than the intrinsic value. D) the intrinsic value
of a call option is always greater than its time value.
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Ans: C
12) Prior to expiration,
A) the intrinsic value of a put option is greater than its actual value. B)
the intrinsic value of a put option is always positive. C) the actual value
of a put option is greater than the intrinsic value. D) the intrinsic value
of a put option is always greater than its time value.
Ans: C
13) If the stock price increases, the price of a put option on that stock
__________, and that of a call option __________.
A) decreases; increases B) decreases; decreases C) increases; decreases
D) increases; increases E) does not change; does not change
Ans: A
14) If the stock price decreases, the price of a put option on that stock
__________, and that of a call option __________.
A) decreases; increases B) decreases; decreases C) increases; decreases
D) increases; increases E) does not change; does not change
Ans: C
All rights reserved © 2025/ 2026 |
Fin 533 Chapter 21 Questions and Correct
Answers/ Latest Update / Already Graded
1) Before expiration, the time value of an in-the-money call option is
always
A) equal to zero. B) positive. C) negative. D) equal to the stock price
minus the exercise price. E) None of the options are correct.
Ans: B
2) Before expiration, the time value of an in-the-money put option is
always
A) equal to zero. B) negative. C) positive. D) equal to the stock price
minus the exercise price. E) None of the options are correct.
Ans: C
3) Before expiration, the time value of an at-the-money call option is
usually
A) positive. B) equal to zero. C) negative. D) equal to the stock price
minus the exercise price. E) None of the options are correct.
Ans: A
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4) Before expiration, the time value of an at-the-money put option is
always
A) equal to zero. B) equal to the stock price minus the exercise price. C)
negative. D) positive. E) None of the options are correct.
Ans: D
5) At expiration, the time value of an in-the-money call option is always
A) equal to zero. B) positive. C) negative. D) equal to the stock price
minus the exercise price. E) None of the options are correct.
Ans: A
6) At expiration, the time value of an in-the-money put option is always
A) equal to zero. B) negative. C) positive. D) equal to the stock price
minus the exercise price. E) None of the options are correct.
Ans: A
7) At expiration, the time value of an at-the-money call option is always
A) positive. B) equal to zero. C) negative. D) equal to the stock price
minus the exercise price.
Ans: B
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8) At expiration, the time value of an at-the-money put option is
always
A) equal to zero. B) equal to the stock price minus the exercise price. C)
negative. D) positive.
Ans: A
9) A call option has an intrinsic value of zero if the option is
A) at the money. B) out of the money. C) in the money. D) at the
money and in the money. E) at the money or out of the money.
Ans: E
10) A put option has an intrinsic value of zero if the option is
A) at the money. B) out of the money. C) in the money. D) at the
money and in the money. E) at the money or out of the money.
Ans: E
11) Prior to expiration,
A) the intrinsic value of a call option is greater than its actual value. B)
the intrinsic value of a call option is always positive. C) the actual value
of a call option is greater than the intrinsic value. D) the intrinsic value
of a call option is always greater than its time value.
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Ans: C
12) Prior to expiration,
A) the intrinsic value of a put option is greater than its actual value. B)
the intrinsic value of a put option is always positive. C) the actual value
of a put option is greater than the intrinsic value. D) the intrinsic value
of a put option is always greater than its time value.
Ans: C
13) If the stock price increases, the price of a put option on that stock
__________, and that of a call option __________.
A) decreases; increases B) decreases; decreases C) increases; decreases
D) increases; increases E) does not change; does not change
Ans: A
14) If the stock price decreases, the price of a put option on that stock
__________, and that of a call option __________.
A) decreases; increases B) decreases; decreases C) increases; decreases
D) increases; increases E) does not change; does not change
Ans: C
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