Log in Sign up. How can we help? What is your email? Upgrade to remove ads. American, more, European B. American, less, European C. American, more, Canadian D.

You purchase a call option on a stock. You write a put option on a stock. Advantages of exchange traded options over OTC options include all but which one of the following? Ease and low cost of trading B. Anonymity of participants C.

Contracts that are tailored to meet the needs of market participants D. No concerns about counterparty credit risk.

Ch 14 Basic Option Position Flashcards | Quizlet

You buy a call option and a put option on General Electric. Both the call option and the put option have the same exercise price and expiration date. You buy a call option on Merritt Corp.

A call option on Brocklehurst Corp. The current stock price of Brocklehurst Corp. You invest in the stock of Rayleigh Corp.

You buy a call option on Summit Corp. You invest in the stock of Valleyview Corp. II, III and IV only B. I, III and IV only C. I, II and III only D. I, II, III and IV. II and IV only C. Which one of the statements about margin requirements on option positions is not correct? The margin required will be higher if the option is in the money. If the required margin exceeds the posted margin the option writer will receive a margin call. A buyer of a put or call option does not have to post margin.

Even if the writer of a call option owns the stock the writer will have to meet the margin requirement in cash. Writing an uncovered call option B. Writing an uncovered put option C. Buying a call option D.

Buying a put option.

Which one of the following is a correct statement? Exercise of warrants results in more outstanding shares of stock, while exercise of listed call options does not. A convertible bond consists of a straight bond plus a specified number of detachable warrants. Call options always have an initial maturity greater than one year while warrants have an initial maturity less than one year.

Call options may be convertible into the stock while warrants are not convertible into the stock.

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What would be a simple options strategy using a put and a call to exploit your conviction about the stock price's future movement? Sell a call B. Purchase a put C. Sell a straddle D. How can you create a position involving a put, a call, and riskless lending that would have the same payoff structure as the stock at expiration? A covered call strategy benefits from what environment? Falling interest rates B.

What combination of puts and calls can simulate a long stock investment? Long call and short put B. Long call and long put C.

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Short call and short put D. Short call and long put.

Which strategy benefits from upside price movement and has some protection should the price of the security fall? Which of the following strategies makes a profit if the stock price stays stable?

Which of the following strategies makes a profit if the stock price declines and loses money when the stock price increases? What strategy could be considered insurance for an investment in a portfolio of stocks? What strategy is designed to ensure a value within the bounds of two different stock prices? You are not sure which way the price will move, but you believe that the results of a patent hearing are definitely going to have a major effect on the stock price.

You are somewhat more bullish than bearish however.

Which one of the following options strategies best fits this scenario? Buy a strip B. Buy a strap C. Buy a straddle D. A convertible bond is deep in the money. I and II only C. II and III only D. I, II and III. You are worried that stock prices may take a dip before you are ready to sell so you are considering purchasing either at the money or out of the money puts.

Security Analysis and Portfolio Mgt Flashcards

You are considering either using puts or calls to hedge this position. One way to hedge your position would be to buy puts. One way to hedge your position would be to write calls. If major stock price declines are likely the hedging with puts is probably better than hedging with short calls.

I and III only D. A combo of a call and a put, each with the same exercise price and expiration date.