Question : 69. At what point the graph of possible values for a : 1284486

 

 

69. At what point on the graph of possible values for a call option does the buyer break even financially? 
A. When stock price equals strike price
B. At any point on the upward-sloping segment of the graph
C. When stock price equals cost of the option plus strike price
D. At the point where the graph intercepts the y-axis

70. Under which condition does a call option approach its upper bound? 
A. When the stock price is far above the strike price
B. When the stock price is closest to the strike price
C. When the stock price is approaching zero
D. When the option is approaching its expiration time

71. When does a change in the value of a call option come the closest to matching the price change in a share of stock? 
A. When the stock is priced far above the strike price.
B. When the stock is priced far below the strike price.
C. When the stock is priced very near the strike price.
D. Changes in call value always come close to matching changes in stock price.

72. At what point is the payoff from owning a call option on a stock greater than the payoff from owning the stock itself? 
A. When stock price exceeds strike price at expiration.
B. When strike price exceeds stock price at expiration.
C. When stock price equals strike price at expiration.
D. Call payoff never exceeds stock payoff.

73. The value of a call option increases as the time to expiration increases because: 
A. the exercise price continually decreases.
B. opportunity increases to surpass exercise price.
C. dividends accumulate while waiting to be paid.
D. the option can be repeatedly exercised.

74. Stocks that have more volatile price changes have more valuable call options because call holders: 
A. capture upside potential without downside risk.
B. realize that volatility decreases the present value of the exercise price.
C. have too little variability in the exercise price.
D. have transferred all risk to put holders.

75. It has been determined that 0.5 share of stock should be purchased with borrowed funds to replicate the payoff to one call option. What is the option’s strike price if the stock could range in value from $110 to $10 at the expiration of the option? 
A. $40
B. $50
C. $60
D. $70

76. Which of the following statements is correct concerning call options? 
A. Value of a call option at expiration will be greater than the stock price.
B. Value of a call option at expiration will be equal to the exercise price.
C. Value of a call option at expiration will be equal to the difference between the stock price and exercise price.
D. Value of a call option at expiration will be equal to zero.

77. Which of the following changes will decrease the value of a call option? 
A. An increase in stock price
B. An increase in strike price
C. An increase in stock price volatility
D. An increase in interest rates

78. An investor who is buying a put option is expecting: 
A. stock prices to go up.
B. stock prices to go down.
C. interest rates to go up.
D. interest rates to go down.

 

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