SIE EXAM Study Guide Questions & Answers: SIE EXAM: Updated A+ Score Guide

An investor purchases 1 ABC Jan 45 Call @ $3. The investor subsequently exercises his option contract. The holder has the right to: A. buy stock at $45 per share B. buy stock at $48 per share C. sell stock at $45 per share D. sell stock at $48 per share (Ans- A. buy stock at $45 per share If the writer of an equity call contract is exercised, the writer must deliver: (Ans- D. stock in 2 business days A customer would buy put contracts because the customer: (Ans- B. is bearish on the underlying security If the writer of an equity put contract is exercised, the writer must deliver: A. cash in 1 business dayB. stock in 1 business day C. cash in 2 business days D. stock in 2 business day (Ans- C. cash in 2 business days The writer of a put on a listed stock is exercised. Upon assignment, the writer must: A. pay the premium B. deliver cash C. buy stock D. sell stock (Ans- C. buy stock The "cost" of an option contract is the: A. premium B. exercise price C. market price of the underlying security D. intrinsic value (Ans- A. premiumABC Jan 50 call contracts are trading in the market at .65. What is the dollar price that a customer would pay for 2 contracts at this price? (Ans- $130.00 An option contract has intrinsic value if exercise is profitable to the: (Ans- holder, ignoring the premium paid Which of the following contracts has the greatest intrinsic value? A. ABC Jan 50 Call when the market price of ABC stock is $55 B. ABC Jan 50 Call when the market price of ABC stock is $50 C. ABC Jan 50 Put when the market price of ABC stock is $40 D. ABC Jan 50 Put when the market price of ABC stock is $60 (Ans- C. ABC Jan 50 Put when the market price of ABC stock is $40