FIN 340 FINAL EXAM QUESTIONS
AND ANSWERS
financial option - ANSWER contract that gives its owner the right (but no
obligation) to purchase or sell an asset at a fixed price at some future date
call option - ANSWER financial option that gives owner the right to buy an
asset
put option - ANSWER financial option that gives owner right to sell an asset
option writer - ANSWER seller of an option contract
derivatives - ANSWER securities whose cash flows depend solely on prices of
other marketed assets
warrant - ANSWER call option written by a company itself on new stock
exercising an option - ANSWER when a holder of an option enforces the
agreement and buys or sells a share of stock at the agreed-upon price
strike (exercise) price - ANSWER the price at which an option holder buys or
sells a share of stock when the option is exercised
American options - ANSWER most common kind of option, allow holders to
exercise the option on any date up to and including the expiration date
expiration date - ANSWER last date on which an option holder has the right to
exercise the option
AND ANSWERS
financial option - ANSWER contract that gives its owner the right (but no
obligation) to purchase or sell an asset at a fixed price at some future date
call option - ANSWER financial option that gives owner the right to buy an
asset
put option - ANSWER financial option that gives owner right to sell an asset
option writer - ANSWER seller of an option contract
derivatives - ANSWER securities whose cash flows depend solely on prices of
other marketed assets
warrant - ANSWER call option written by a company itself on new stock
exercising an option - ANSWER when a holder of an option enforces the
agreement and buys or sells a share of stock at the agreed-upon price
strike (exercise) price - ANSWER the price at which an option holder buys or
sells a share of stock when the option is exercised
American options - ANSWER most common kind of option, allow holders to
exercise the option on any date up to and including the expiration date
expiration date - ANSWER last date on which an option holder has the right to
exercise the option
