FIN 533 CHAPTER 21 EXAM QUESTIONS
AND ANSWERS 100% PASS
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
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
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,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
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. - 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 __________.
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, 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
15) Other things equal, the price of a stock call option is positively correlated with the following
factors except
A) the stock price. B) the time to expiration. C) the stock volatility. D) the exercise price. -
ANS D
16) Other things equal, the price of a stock call option is positively correlated with which of the
following factors?
A) The stock price B) The time to expiration C) The stock volatility D) The exercise price E) The
stock price, time to expiration, and stock volatility - ANS E
17) Other things equal, the price of a stock call option is negatively correlated with which of the
following factors?
A) The stock price B) The time to expiration C) The stock volatility D) The exercise price E) The
stock price, time to expiration, and stock volatility - ANS D
18) Other things equal, the price of a stock put option is positively correlated with the following
factors except
A) the stock price. B) the time to expiration. C) the stock volatility. D) the exercise price. -
ANS A
19) Other things equal, the price of a stock put option is positively correlated with which of the
following factors?
A) The stock price B) The time to expiration C) The stock volatility D) The exercise price E) The
time to expiration, stock volatility, and exercise price - ANS E
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AND ANSWERS 100% PASS
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
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
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,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
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. - 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 __________.
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, 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
15) Other things equal, the price of a stock call option is positively correlated with the following
factors except
A) the stock price. B) the time to expiration. C) the stock volatility. D) the exercise price. -
ANS D
16) Other things equal, the price of a stock call option is positively correlated with which of the
following factors?
A) The stock price B) The time to expiration C) The stock volatility D) The exercise price E) The
stock price, time to expiration, and stock volatility - ANS E
17) Other things equal, the price of a stock call option is negatively correlated with which of the
following factors?
A) The stock price B) The time to expiration C) The stock volatility D) The exercise price E) The
stock price, time to expiration, and stock volatility - ANS D
18) Other things equal, the price of a stock put option is positively correlated with the following
factors except
A) the stock price. B) the time to expiration. C) the stock volatility. D) the exercise price. -
ANS A
19) Other things equal, the price of a stock put option is positively correlated with which of the
following factors?
A) The stock price B) The time to expiration C) The stock volatility D) The exercise price E) The
time to expiration, stock volatility, and exercise price - ANS E
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