BADM 710 EXAM SCRIPT 2026 FULL
SOLUTION TEST BANK
●● The act of buying and selling the underlying asset via the option
contract is called ________ the option.
A. Exposing
B. Exercising
C. Striking
D. Selling Answer: B
●● (Screenshot 1)
The RTP Corporation has the following call option information. You are
interested in purchasing four contracts for the July call. How much will
be the cost of the transaction?
A. $1,000
B. $1,250
C. $1,500
D. $1,800
E. $2,000 Answer: D
●● A financial contract that provides its owner with the right, but not the
obligation, to buy or sell a specified asset at an agreed-upon price on or
before a given future date is called a(n) _____ contract.
,A. Option
B. Futures
C. Forward
D. Swap
E. Straddle Answer: A
●● The act where an owner of an option buys or sells the underlying
asset, as is his right, is called ______ the option.
A. Striking
B. Exercising
C. Opening
D. Splitting
E. Strangling Answer: B
●● The fixed price in an option contract at which the owner can buy or
sell the underlying asset is called the option's:
A. Opening price
B. Intrinsic value
C. Strike price
D. Market price
E. Time value Answer: C
,●● The last day on which an owner of an option can elect to exercise
that option is referred to as the _____ date.
A. Ex-payment
B. Ex-option
C. Opening
D. Expiration
E. Intrinsic Answer: D
●● An option that may be exercised only on the expiration date is called
a(n) _____ option.
A. European
B. American
C. Bermudian
D. Futures
E. Asian Answer: A
●● If a call option has a positive intrinsic value at expiration the call is
said to be:
A. Funded
B. Unfunded
C. At the money
D. In the money
E. Out of the money Answer: D
, ●● A _____ is a derivative security that gives the owner the right, but
not the obligation, to buy an asset at a fixed price for a specified period
of time.
A. Futures contract
B. Call option
C. Put option
D. Swap
E. Forward contract Answer: B
●● Which of these will increase the value of a call option?
I. An increase in the market value of the underlying asset
II. An increase in the option's strike price
III. A decrease in the market value of the underlying asset
IV. A decrease in the option's strike price
A. I and II only
B. II only
C. II and III only
D. I and IV only
E. I only Answer: D
●● An out-of-the-money call option is best defined as an option that:
SOLUTION TEST BANK
●● The act of buying and selling the underlying asset via the option
contract is called ________ the option.
A. Exposing
B. Exercising
C. Striking
D. Selling Answer: B
●● (Screenshot 1)
The RTP Corporation has the following call option information. You are
interested in purchasing four contracts for the July call. How much will
be the cost of the transaction?
A. $1,000
B. $1,250
C. $1,500
D. $1,800
E. $2,000 Answer: D
●● A financial contract that provides its owner with the right, but not the
obligation, to buy or sell a specified asset at an agreed-upon price on or
before a given future date is called a(n) _____ contract.
,A. Option
B. Futures
C. Forward
D. Swap
E. Straddle Answer: A
●● The act where an owner of an option buys or sells the underlying
asset, as is his right, is called ______ the option.
A. Striking
B. Exercising
C. Opening
D. Splitting
E. Strangling Answer: B
●● The fixed price in an option contract at which the owner can buy or
sell the underlying asset is called the option's:
A. Opening price
B. Intrinsic value
C. Strike price
D. Market price
E. Time value Answer: C
,●● The last day on which an owner of an option can elect to exercise
that option is referred to as the _____ date.
A. Ex-payment
B. Ex-option
C. Opening
D. Expiration
E. Intrinsic Answer: D
●● An option that may be exercised only on the expiration date is called
a(n) _____ option.
A. European
B. American
C. Bermudian
D. Futures
E. Asian Answer: A
●● If a call option has a positive intrinsic value at expiration the call is
said to be:
A. Funded
B. Unfunded
C. At the money
D. In the money
E. Out of the money Answer: D
, ●● A _____ is a derivative security that gives the owner the right, but
not the obligation, to buy an asset at a fixed price for a specified period
of time.
A. Futures contract
B. Call option
C. Put option
D. Swap
E. Forward contract Answer: B
●● Which of these will increase the value of a call option?
I. An increase in the market value of the underlying asset
II. An increase in the option's strike price
III. A decrease in the market value of the underlying asset
IV. A decrease in the option's strike price
A. I and II only
B. II only
C. II and III only
D. I and IV only
E. I only Answer: D
●● An out-of-the-money call option is best defined as an option that:
