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Options Trading Test Bank Questions

The document consists of a test bank with questions related to options trading, including calculations for stock splits, stock dividends, and cash dividends. It also includes a question about initial margin for writing put options and inquiries about actions leading to IBM issuing more shares. The questions require knowledge of options and stock market mechanics.

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D Ho
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37 views1 page

Options Trading Test Bank Questions

The document consists of a test bank with questions related to options trading, including calculations for stock splits, stock dividends, and cash dividends. It also includes a question about initial margin for writing put options and inquiries about actions leading to IBM issuing more shares. The questions require knowledge of options and stock market mechanics.

Uploaded by

D Ho
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd

CHAPTER 8

Test Bank

1. Consider an exchange traded put option to sell 100 shares for $20.

Give (a) the strike price and (b) the number of shares that can be sold after

(i) A 5 for 1 stock split (a) ………….(b) ……………

(ii) A 25% stock dividend (a) ……….. (b) ………….

(iii) A $5 cash dividend (a) ………. (b) ……………

2. A trader writes two naked put option contracts. The option price is $3, the strike price is $40 and the
stock price is $42. What is the initial margin? ……………..

3. Which of the following lead to IBM issuing more shares (circle three)

(a) Some executive stock options are exercised

(b) Some exchange-traded put options are exercised

(c) Some exchange-traded call options are exercised

(d) Some warrants on IBM are exercised

(e) Some of IBM's convertible debt is converted to equity.

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