Explore topic-wise MCQs in Financial Management/Financial Markets.

This section includes 68 Mcqs, each offering curated multiple-choice questions to sharpen your Financial Management/Financial Markets knowledge and support exam preparation. Choose a topic below to get started.

51.

The value of the option which is considered as its worth as soon as it is expired is classified as

A. minimum option value
B. minimum value
C. maximum value
D. exercise value
Answer» E.
Discussion
52.

The pricing model approach in which it is assumed that stock price can have one of the two values of stock is classified as

A. valued approach
B. marketability approach
C. stock approach
D. binomial approach
Answer» E.
Discussion
53.

In financial planning, the formula MAX[current price of stock-strike price‚0] is used to calculate

A. option return rate
B. exercise value
C. option value
D. stock value
Answer» C. option value
Discussion
54.

An investor who writes stock call options in his own portfolio is classified as

A. due option
B. covered option
C. undue option
D. uncovered option
Answer» C. undue option
Discussion
55.

In the stock option, a little chance exists for large gain on stock when the price of stock

A. have volatile movement
B. moves freely
C. rarely moves
D. stays same
Answer» D. stays same
Discussion
56.

In binomial approach of option pricing model, the last step for finding an option is

A. price hike
B. price value
C. put price
D. call price
Answer» E.
Discussion
57.

If the stock market price is higher than the strike price, then the call option

A. price will be lower
B. rate will be higher
C. price will be higher
D. rate will be lower
Answer» D. rate will be lower
Discussion
58.

The present value of portfolio is $1300 and the current value of stock in portfolio is $2300 then the current option price will be

A. 3600
B. 1000
C. 0.0176
D. 1.76 times
Answer» C. 0.0176
Discussion
59.

In the options pricing, an exercise price rises from lower to higher which leads to

A. volatile options
B. option value increases
C. option value decreases
D. option value stable
Answer» D. option value stable
Discussion
60.

The call options situation in which the strike price is greater than current price of stock is classified as

A. out-of-the-portfolio
B. in-the-portfolio
C. in-the-money
D. out-of-the-money
Answer» E.
Discussion
61.

In the financial planning, a higher strike price leads to call option

A. price is higher
B. rate is lower
C. price is lower
D. rate is higher
Answer» D. rate is higher
Discussion
62.

An option that gives investors the right to sell a stock at predefined price is classified as

A. put option
B. call option
C. money back options
D. out of money options
Answer» B. call option
Discussion
63.

The present value of portfolio $850 and the current option price $1620 then the value of stock included in portfolio would be

A. 0.019
B. 1.90 times
C. 770
D. 2470
Answer» D. 2470
Discussion
64.

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
Answer» C. current price
Discussion
65.

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
Answer» C. short money options
Discussion
66.

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
Answer» D. option model
Discussion
67.

The types of option markets do not include

A. European option
B. American option
C. expiry option
D. covered options
Answer» D. covered options
Discussion
68.

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
Answer» B. FV of exercising cost
Discussion