| 1. | According to the Black Scholes model, the stocks with the call option pays the |
| a. | dividends |
| b. | no dividends |
| c. | current price |
| d. | past price |
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Answer: (b).no dividends
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| 2. | An exercise of option in future and the part of option call value depends specifically on |
| a. | PV of exercising cost |
| b. | FV of exercising cost |
| c. | PV of cost volatility |
| d. | FV of cost volatility |
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Answer: (a).PV of exercising cost
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| 3. | The yield on Treasury bill with a maturity is classified as a risk free rate but must be equal to an |
| a. | option closing price |
| b. | option beginning price |
| c. | option expiration |
| d. | option model |
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Answer: (c).option expiration
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| 4. | The long-term equity anticipation security is usually classified as |
| a. | short-term options |
| b. | long-term options |
| c. | short money options |
| d. | yearly call |
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Answer: (b).long-term options
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| 5. | The types of option markets do not include |
| a. | European option |
| b. | American option |
| c. | expiry option |
| d. | covered options |
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Answer: (c).expiry option
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