1. Which of the following is true? a. Futures give you the right to trade but no

ID: 2795075 • Letter: 1

Question

1. Which of the following is true?

a. Futures give you the right to trade but not the obligation

b. Options give you the right to trade but not the obligation

c. Futures are custom contracts

d. Options are custom contracts

2. An American call option gives the buyer the right to ________.

a. Buy the underlying asset at the strike price on or before the expiration date

b. Buy the underlying asset at the strike price only at the expiration date

c. Sell the underlying asset at the strike price on or before the expiration date

d. Sell the underlying asset at the strike price only at the expiration date

3. Time value of a stock option increases with:

a. The stock’s price

b. The stock’s volatility

c. The stock’s market capitalization

d. None of the above

1) Correct choice : B

Futures and options are standard contracts and futures carries the obligation also

2) Correct choice A

In american call option the exercise can be done prior to expiry or at expiry

3) Correct choice: B

Volatility is directly proportional to the price of call and put

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