SIE Exam Lesson 13 Options pt 3
SIE Exam Lesson 13 Options pt 3
This is a SIE Exam Lesson 13 Options pt 3  options pt.1which is covering options pt. 1 basic option terminology of call and put options See how you do if you need help listen to the lesson over.

Questions covered include

Below are questions based on the previous lesson. Choose the letter of the correct answer.
To take the quiz online, click here.

Quiz Options Part 3

1. It refers to the number of options that are currently trading in the market.
A. breakeven point
B. open interest
C. utility
D. volatility

2. The following increases open interest EXCEPT:
A. buying to close
B. buying to open
C. selling to open
D. All of the above increase open interest.

3. If you bought an option and you want to sell it, the market price of the option would be ___.
A. the option’s time value at expiration date
B. the option’s intrinsic value at expiration date
C. the option’s intrinsic value when you bought the option
D. the option’s premium

4. Which of the following factors least affect the premium of an option?
A. dividend
B. interest rate

C. option time period
D. volatility

5. If you want to short a stock and interest rates are high, you have to pay higher margin interest rates.
A. True
B. False

6. Utility stocks used to be referred to as ___.
A. county stocks
B. growth stocks
C. value stocks
D. widow-and-orphan stocks

7. Why do utility stocks often have low premium options?
A. Utility stocks often have high income.
B. Utility stocks often have high volatility.
C. Utility stocks often have low income.
D. Utility stocks often have low volatility.

8. It is the measure of a stock’s volatility in relation to the market.
A. beta
B. theta
C. vega
D. veta

9. Which of the following is NOT true about beta?
A. A beta lower than one means that the stock moves more than the market does in general.
B. A beta of one correlates equally with the market.
C. High beta stocks will have higher option premiums.
D. High dividend stocks have a lower beta.

10. If you short a stock and the stock pays a dividend, you are required to pay the dividend when that dividend comes do.
A. True
B. False

SIE Exam Lesson 13 Options pt 3 cont:

11. Compared to call premiums, put premiums are lower on a high dividend stock.
A. True
B. False

12. Which of the following would yield a low option premium?
A. An option with a high dividend on the stock.
B. An option with a high volatility.
C. An option with a long time period before expiration.
D. all of the above

13. If you think the stock would go up, which is the best option strategy to take?
A. Buy a long call option.
B. Buy a long put option.

C. Write a covered call.
D. Write a naked call.

14. Why is it wise to write a covered call when the stock would go down?
A. so that the call option would not be exercised and you can keep the premium
B. so that you can buy the stock at a lower strike price
C. so that you can profit by selling the stock at a higher price
D. all of the above

15. If you long a call, that gives you the right to buy the stock at a specific strike price.
A. True
B. False

16. If you short a put, you are obligated to deliver the stock if it is called away from you.
A. True
B. False

17. A stock is selling at $50.