,ACCESStkTesttkBanktkfortkOptionstkFuturestkandtkOthertkDerivativestk11thtkEditi
ntkHull
Hull:tkOptions,tkFutures,tkandtkOthertkDerivatives,tkEleventhtkEditiontk
Chaptertk1:tkIntroduction
MultipletkChoicetkTesttkBank:tkQuestionstkwithtkAnswers
1. Atkone-yeartkforwardtkcontracttkistkantkagreementtkwhere:
A. Onetksidetkhastkthetkrighttktotkbuytkantkassettkfortkatkcertaintkpricetkintkonetkyear’stktime.
B. Onetksidetkhastkthetkobligationtktotkbuytkantkassettkfortkatkcertaintkpricetkintkonetkyear’stkti
me.
C. Onetksidetkhastkthetkobligationtktotkbuytkantkassettkfortkatkcertaintkpricetkattksometktim
etkduringtkthetknexttkyear.
D. Onetksidetkhastkthetkobligationtktotkbuytkantkassettkfortkthetkmarkettkpricetkintkonetkyear’s
tktime.
Answer:tkB
Atkone-yeartkforwardtkcontracttkistkantkobligationtktotkbuytkortkselltkintkonetkyear’stktimetkfortka
predeterminedtkprice.tkBytkcontrast,tkantkoptiontkistkthetkrighttktotkbuytkortksell.
2. WhichtkoftkthetkfollowingtkistkNOTtktrue?
A. WhentkatkCBOEtkcalltkoptiontkontkIBMtkistkexercised,tkIBMtkissuestkmoretkstock.
B. AntkAmericantkoptiontkcantkbetkexercisedtkattkanytktimetkduringtkitstklife.
C. Atkcalltkoptiontkwilltkalwaystkbetkexercisedtkattkmaturitytkiftkthetkunderlyingtkassettkpricet
kistkgreatertkthantkthetkstriketkprice.
D. Atkputtkoptiontkwilltkalwaystkbetkexercisedtkattkmaturitytkiftkthetkstriketkpricetkistkgrea
tertkthantkthetkunderlyingtkassettkprice.
Answer:tkA
WhentkantkIBMtkcalltkoptiontkistkexercised,tkthetkoptiontksellertkmusttkbuytksharestkintkthetkmarke
ttktotkselltktotkthetkoptiontkbuyer.tkIBMtkistknottkinvolvedtkintkanytkway.tkAnswerstkB,tkC,tkandtkDtk
aretktrue.
3. Atkone-yeartkcalltkoptiontkontkatkstocktkwithtkatkstriketkpricetkoftk$30tkcoststk$3;tkatkone-
yeartkputtkoptiontkont k thetkstocktkwithtkatkstriketkpricetkoftk$30tkcoststk$4.tkSupposetkthattkatktr
adertkbuystktwotkcalltkoptionstkandtkonetkputtkoption.tkThetkbreakeventkstocktkpricetkabovetkwhi
chtkthetktradertkmakestkatkprofittkis:
A. $35
B. $40
C. $30
D. $36
Answer:tkA
Whentkthetkstocktkpricetkistk$35,tkthetktwotkcalltkoptionstkprovidetkatkpayofftkoftk2tk ×tk(35tk−tk30
)tkortk$10.tkThetkputtkoptiontkprovidestknotkpayoff.tkThetktotaltkcosttkoftkthetkoptionstkistk2tk×tk3tk
+tk4tkortk$10.t k ThetkstocktkpricetkintkA,tk$35,tkistkthereforetkthetkbreakeventkstocktkpricetkabovet
kwhichtkthetkpositiontkistkprofitabletkbecausetkittkistkthetkpricetkfortkwhichtkthetkcosttkoftkthetkopt
ionstkequalstkthetkpayoff.
mynursytest.store
,ACCESStkTesttkBanktkfortkOptionstkFuturestkandtkOthertkDerivativestk11thtkEditi
ntkHull
4. Atkone-yeartkcalltkoptiontkontkatkstocktkwithtkatkstriketkpricetkoftk$30tkcoststk$3;tkatkone-
yeartkputtkoptiontkont k thetkstocktkwithtkatkstriketkpricetkoftk$30tkcoststk$4.tkSupposetkthattkatktr
adertkbuystktwotkcalltkoptionstkandtkone
mynursytest.store
, ACCESStkTesttkBanktkfortkOptionstkFuturestkandtkOthertkDerivativestk11thtkEditi
ntkHull
puttkoption.tkThetkbreakeventkstocktkpricetkbelowtkwhichtkthetktradertkmakestkatkprofittkis:
A. $25
B. $28
C. $26
D. $20
Answer:tkD
Whentkthetkstocktkpricetkistk$20,tkthetktwotkcalltkoptionstkprovidetknotkpayoff.tkThetkputtkoptiontk
providestkatkpayofftkoftk30tk−tk20tkortk$10.tkThetktotaltkcosttkoftkthetkoptionstkistk2tk×tk3tk+tk4tkortk
$10.t k ThetkstocktkpricetkintkD,
$20,tkistkthereforetkthetkbreakeventkstocktkpricetkbelowtkwhichtkthetkpositiontkistkprofitabletkbec
ausetkittkistkthetkpricetkfortkwhichtkthetkcosttkoftkthetkoptionstkequalstkthetkpayoff.
5. Whichtkoftkthetkfollowingtkistkapproximatelytktruetkwhentksizetkistkmeasuredtkintktermstkoftkthetk
underlyingtkprincipaltkamountstkortkvaluetkoftkthetkunderlyingtkassets?
A. Thetkexchange-tradedtkmarkettkistktwicetkastkbigtkastkthetkover-the-countertkmarket.
B. Thetkover-the-countertkmarkettkistktwicetkastkbigtkastkthetkexchange-tradedtkmarket.
C. Thetkexchange-tradedtkmarkettkistkabouttktentktimestkastkbigtkastkthetkover-the-
countertkmarket.
D. Thetkover-the-countertkmarkettkistkabouttktentktimestkastkbigtkastkthetkexchange-
tradedtkmarket.
Answer:tkD
Thetkover-the-countertkmarkettkistkabouttk$600tktrilliontkwhereastkthetkexchange-
tradedtkmarkettkistkabouttk$60tktrillion.
6. Whichtkoftkthetkfollowingtkbesttkdescribestkthetktermtk“spottkprice”?
A. Thetkpricetkfortkimmediatetkdelivery.
B. Thetkpricetkfortkdeliverytkattkatkfuturetktime.
C. Thetkpricetkoftkantkassettkthattkhastkbeentkdamaged.
D. Thetkpricetkoftkrentingtkantkasset.
Answer:tkA
Thetkspottkpricetkistkthetkpricetkfortkimmediatetkdelivery.tkThetkfuturestkortkforwardtkpricetkistkth
etkpricetkfort k deliverytkintkthetkfuture.
7. Whichtkoftkthetkfollowingtkistktruetkabouttkatklongtkforwardtkcontract?
A. Thetkcontracttkbecomestkmoretkvaluabletkastkthetkpricetkoftkthetkassettkdeclines.
B. Thetkcontracttkbecomestkmoretkvaluabletkastkthetkpricetkoftkthetkassettkrises.
C. Thetkcontracttkistkworthtkzerotkiftkthetkpricetkoftkthetkassettkdeclinestkaftertkthetkcontract
tkhastkbeentkenteredtkinto.
D. Thet k contractt k ist k wortht k zerot k ift k thet k pricet k oft k thet k assett k risest k aftert k thet k c
ontractt k hast k beentkenteredtkinto.
Answer:t k B
mynursytest.store
ntkHull
Hull:tkOptions,tkFutures,tkandtkOthertkDerivatives,tkEleventhtkEditiontk
Chaptertk1:tkIntroduction
MultipletkChoicetkTesttkBank:tkQuestionstkwithtkAnswers
1. Atkone-yeartkforwardtkcontracttkistkantkagreementtkwhere:
A. Onetksidetkhastkthetkrighttktotkbuytkantkassettkfortkatkcertaintkpricetkintkonetkyear’stktime.
B. Onetksidetkhastkthetkobligationtktotkbuytkantkassettkfortkatkcertaintkpricetkintkonetkyear’stkti
me.
C. Onetksidetkhastkthetkobligationtktotkbuytkantkassettkfortkatkcertaintkpricetkattksometktim
etkduringtkthetknexttkyear.
D. Onetksidetkhastkthetkobligationtktotkbuytkantkassettkfortkthetkmarkettkpricetkintkonetkyear’s
tktime.
Answer:tkB
Atkone-yeartkforwardtkcontracttkistkantkobligationtktotkbuytkortkselltkintkonetkyear’stktimetkfortka
predeterminedtkprice.tkBytkcontrast,tkantkoptiontkistkthetkrighttktotkbuytkortksell.
2. WhichtkoftkthetkfollowingtkistkNOTtktrue?
A. WhentkatkCBOEtkcalltkoptiontkontkIBMtkistkexercised,tkIBMtkissuestkmoretkstock.
B. AntkAmericantkoptiontkcantkbetkexercisedtkattkanytktimetkduringtkitstklife.
C. Atkcalltkoptiontkwilltkalwaystkbetkexercisedtkattkmaturitytkiftkthetkunderlyingtkassettkpricet
kistkgreatertkthantkthetkstriketkprice.
D. Atkputtkoptiontkwilltkalwaystkbetkexercisedtkattkmaturitytkiftkthetkstriketkpricetkistkgrea
tertkthantkthetkunderlyingtkassettkprice.
Answer:tkA
WhentkantkIBMtkcalltkoptiontkistkexercised,tkthetkoptiontksellertkmusttkbuytksharestkintkthetkmarke
ttktotkselltktotkthetkoptiontkbuyer.tkIBMtkistknottkinvolvedtkintkanytkway.tkAnswerstkB,tkC,tkandtkDtk
aretktrue.
3. Atkone-yeartkcalltkoptiontkontkatkstocktkwithtkatkstriketkpricetkoftk$30tkcoststk$3;tkatkone-
yeartkputtkoptiontkont k thetkstocktkwithtkatkstriketkpricetkoftk$30tkcoststk$4.tkSupposetkthattkatktr
adertkbuystktwotkcalltkoptionstkandtkonetkputtkoption.tkThetkbreakeventkstocktkpricetkabovetkwhi
chtkthetktradertkmakestkatkprofittkis:
A. $35
B. $40
C. $30
D. $36
Answer:tkA
Whentkthetkstocktkpricetkistk$35,tkthetktwotkcalltkoptionstkprovidetkatkpayofftkoftk2tk ×tk(35tk−tk30
)tkortk$10.tkThetkputtkoptiontkprovidestknotkpayoff.tkThetktotaltkcosttkoftkthetkoptionstkistk2tk×tk3tk
+tk4tkortk$10.t k ThetkstocktkpricetkintkA,tk$35,tkistkthereforetkthetkbreakeventkstocktkpricetkabovet
kwhichtkthetkpositiontkistkprofitabletkbecausetkittkistkthetkpricetkfortkwhichtkthetkcosttkoftkthetkopt
ionstkequalstkthetkpayoff.
mynursytest.store
,ACCESStkTesttkBanktkfortkOptionstkFuturestkandtkOthertkDerivativestk11thtkEditi
ntkHull
4. Atkone-yeartkcalltkoptiontkontkatkstocktkwithtkatkstriketkpricetkoftk$30tkcoststk$3;tkatkone-
yeartkputtkoptiontkont k thetkstocktkwithtkatkstriketkpricetkoftk$30tkcoststk$4.tkSupposetkthattkatktr
adertkbuystktwotkcalltkoptionstkandtkone
mynursytest.store
, ACCESStkTesttkBanktkfortkOptionstkFuturestkandtkOthertkDerivativestk11thtkEditi
ntkHull
puttkoption.tkThetkbreakeventkstocktkpricetkbelowtkwhichtkthetktradertkmakestkatkprofittkis:
A. $25
B. $28
C. $26
D. $20
Answer:tkD
Whentkthetkstocktkpricetkistk$20,tkthetktwotkcalltkoptionstkprovidetknotkpayoff.tkThetkputtkoptiontk
providestkatkpayofftkoftk30tk−tk20tkortk$10.tkThetktotaltkcosttkoftkthetkoptionstkistk2tk×tk3tk+tk4tkortk
$10.t k ThetkstocktkpricetkintkD,
$20,tkistkthereforetkthetkbreakeventkstocktkpricetkbelowtkwhichtkthetkpositiontkistkprofitabletkbec
ausetkittkistkthetkpricetkfortkwhichtkthetkcosttkoftkthetkoptionstkequalstkthetkpayoff.
5. Whichtkoftkthetkfollowingtkistkapproximatelytktruetkwhentksizetkistkmeasuredtkintktermstkoftkthetk
underlyingtkprincipaltkamountstkortkvaluetkoftkthetkunderlyingtkassets?
A. Thetkexchange-tradedtkmarkettkistktwicetkastkbigtkastkthetkover-the-countertkmarket.
B. Thetkover-the-countertkmarkettkistktwicetkastkbigtkastkthetkexchange-tradedtkmarket.
C. Thetkexchange-tradedtkmarkettkistkabouttktentktimestkastkbigtkastkthetkover-the-
countertkmarket.
D. Thetkover-the-countertkmarkettkistkabouttktentktimestkastkbigtkastkthetkexchange-
tradedtkmarket.
Answer:tkD
Thetkover-the-countertkmarkettkistkabouttk$600tktrilliontkwhereastkthetkexchange-
tradedtkmarkettkistkabouttk$60tktrillion.
6. Whichtkoftkthetkfollowingtkbesttkdescribestkthetktermtk“spottkprice”?
A. Thetkpricetkfortkimmediatetkdelivery.
B. Thetkpricetkfortkdeliverytkattkatkfuturetktime.
C. Thetkpricetkoftkantkassettkthattkhastkbeentkdamaged.
D. Thetkpricetkoftkrentingtkantkasset.
Answer:tkA
Thetkspottkpricetkistkthetkpricetkfortkimmediatetkdelivery.tkThetkfuturestkortkforwardtkpricetkistkth
etkpricetkfort k deliverytkintkthetkfuture.
7. Whichtkoftkthetkfollowingtkistktruetkabouttkatklongtkforwardtkcontract?
A. Thetkcontracttkbecomestkmoretkvaluabletkastkthetkpricetkoftkthetkassettkdeclines.
B. Thetkcontracttkbecomestkmoretkvaluabletkastkthetkpricetkoftkthetkassettkrises.
C. Thetkcontracttkistkworthtkzerotkiftkthetkpricetkoftkthetkassettkdeclinestkaftertkthetkcontract
tkhastkbeentkenteredtkinto.
D. Thet k contractt k ist k wortht k zerot k ift k thet k pricet k oft k thet k assett k risest k aftert k thet k c
ontractt k hast k beentkenteredtkinto.
Answer:t k B
mynursytest.store
