16.An out-of-the-money put and an in-the-money call are defined as: Put Call A) market price > strike price strike price > market price B) strike price > market price
strike price > market price C) strike price > market price
market price > strike price D) market price > strike price market price > strike price
17.Which of the following statements about the potential profits and losses from selling a call is most accurate? A) Losses are theoretically unlimited. B) Profits are theoretically unlimited. C) Losses are limited to the initial premium the seller receives. D) Losses are limited to the strike price plus the premium.
18.Which of the following statements about uncovered call options is least accurate? A) The loss potential to the writer is unlimited. B) The most the holder will lose is the premium. C) The profit potential to the holder is unlimited. D) The most the writer can make is the premium plus the difference between the exercise price (X) and the stock price (S).
19.Which of the following statements about puts and calls is most accurate? A) The most the writer of a call can lose is the stock's price less the premium. B) The most the buyer of a call can lose is the premium. C) A put holder will exercise the put if the price of the stock is equal to or less than the strike price. D) The potential loss to the writer of a put is unlimited.
20.Bidco Corporation common stock has a market value of $30.00. Which statement about put and call options available on Bidco common is most accurate? A) A call with a strike price of $25.00 is at-the-money. B) A put with a strike price of $20.00 has intrinsic value. C) A put with a strike price of $35.00 is in-the-money. D) A call with a strike price of $30.00 is in-the-money. |