SIE Mastery Exam 2 Review UPDATED
ACTUAL Questions and CORRECT
Answers
The holder of a put on a listed stock exercises. The holder must: - CORRECT ANSWER -
Deliver stock
An investor writes 1 ABC Jan 45 Put @ $3. The contract subsequently is exercised. The writer is
obligated to: - CORRECT ANSWER - Buy stock at $45 per share
If an equity put writer is exercised, the writer has the obligation to: - CORRECT
ANSWER - Buy stock in 2 business days at the strike price
The premium on a call or put option is the: - CORRECT ANSWER - Cost of the contract
The purchase of a call has what advantage over buying the underlying security? - CORRECT
ANSWER - Lower Capital Requirement
A customer is short an ABC Jan 60 Call. The position has a profit that the customer wishes to
capture. The proper order to enter is a(n): - CORRECT ANSWER - Closing purchase
A customer is short an ABC Jan 60 Put. The position has a profit that the customer wishes to
capture. The proper order to enter is a(n): - CORRECT ANSWER - Closing purchase
A customer is short an ABC Jan 60 Put. The position has a profit that the customer wishes to
capture. The proper order to enter is a(n): - CORRECT ANSWER - Closing Sale
In November, a customer buys 1 ABC Jan 70 Call @ $4 when the market price of ABC is $71.
The breakeven point for the position is: - CORRECT ANSWER - $74
, The sale of an "at the money" call is a: - CORRECT ANSWER - bear/neutral strategy
The sale of a call has all of the same characteristics as selling stock short EXCEPT:
A. unlimited loss potential in a rising market
B. limited gain potential in a falling market
C. low liquidity risk if the position is to be liquidated
D. no erosion of value as the position is held - CORRECT ANSWER - D. no erosion of
value as the position is held
Which options strategy provides a gain equal to the premium in a bear market? - CORRECT
ANSWER - Short Call
A customer sells 1 ABC Feb 50 Call @ $7 when the market price of ABC is $52. The stock
moves to $80 and the customer is assigned. The stock is bought in the market for delivery. The
gain or loss to the writer is: - CORRECT ANSWER - $2,300 loss
In January, a customer sells 1 ABC Jun 55 Call @ $6 when the market price of ABC is $56. If
ABC rises to $62 and the writer is assigned, the customer will: - CORRECT ANSWER -
lose $100
A customer sells 1 ABC Feb 50 Call @ $7 when the market price of ABC is $52. If the market
value of ABC falls to $48 and stays there through February, the customer will: - CORRECT
ANSWER - Gain $700
A customer buys 1 ABC Jul 70 Put at $9 when the market price of ABC is $66. ABC stock falls
to $62 per share and the customer exercises the put and buys the stock at the market for delivery.
The customer: - CORRECT ANSWER - loses $100
A customer buys 1 ABC Jul 45 Put at $4 when the market price of ABC is $46. The customer's
maximum potential gain is: - CORRECT ANSWER - $4,100
ACTUAL Questions and CORRECT
Answers
The holder of a put on a listed stock exercises. The holder must: - CORRECT ANSWER -
Deliver stock
An investor writes 1 ABC Jan 45 Put @ $3. The contract subsequently is exercised. The writer is
obligated to: - CORRECT ANSWER - Buy stock at $45 per share
If an equity put writer is exercised, the writer has the obligation to: - CORRECT
ANSWER - Buy stock in 2 business days at the strike price
The premium on a call or put option is the: - CORRECT ANSWER - Cost of the contract
The purchase of a call has what advantage over buying the underlying security? - CORRECT
ANSWER - Lower Capital Requirement
A customer is short an ABC Jan 60 Call. The position has a profit that the customer wishes to
capture. The proper order to enter is a(n): - CORRECT ANSWER - Closing purchase
A customer is short an ABC Jan 60 Put. The position has a profit that the customer wishes to
capture. The proper order to enter is a(n): - CORRECT ANSWER - Closing purchase
A customer is short an ABC Jan 60 Put. The position has a profit that the customer wishes to
capture. The proper order to enter is a(n): - CORRECT ANSWER - Closing Sale
In November, a customer buys 1 ABC Jan 70 Call @ $4 when the market price of ABC is $71.
The breakeven point for the position is: - CORRECT ANSWER - $74
, The sale of an "at the money" call is a: - CORRECT ANSWER - bear/neutral strategy
The sale of a call has all of the same characteristics as selling stock short EXCEPT:
A. unlimited loss potential in a rising market
B. limited gain potential in a falling market
C. low liquidity risk if the position is to be liquidated
D. no erosion of value as the position is held - CORRECT ANSWER - D. no erosion of
value as the position is held
Which options strategy provides a gain equal to the premium in a bear market? - CORRECT
ANSWER - Short Call
A customer sells 1 ABC Feb 50 Call @ $7 when the market price of ABC is $52. The stock
moves to $80 and the customer is assigned. The stock is bought in the market for delivery. The
gain or loss to the writer is: - CORRECT ANSWER - $2,300 loss
In January, a customer sells 1 ABC Jun 55 Call @ $6 when the market price of ABC is $56. If
ABC rises to $62 and the writer is assigned, the customer will: - CORRECT ANSWER -
lose $100
A customer sells 1 ABC Feb 50 Call @ $7 when the market price of ABC is $52. If the market
value of ABC falls to $48 and stays there through February, the customer will: - CORRECT
ANSWER - Gain $700
A customer buys 1 ABC Jul 70 Put at $9 when the market price of ABC is $66. ABC stock falls
to $62 per share and the customer exercises the put and buys the stock at the market for delivery.
The customer: - CORRECT ANSWER - loses $100
A customer buys 1 ABC Jul 45 Put at $4 when the market price of ABC is $46. The customer's
maximum potential gain is: - CORRECT ANSWER - $4,100
