Ten multiple-choice Finance questions: Question 1An investor buys a European put on a share for $1. The stock price is currently $21 and the strike price is $17. When does the investor make a profit?A? Price is less than $20B. Price is less than $17C. Price is less than $16Flag this QuestionQuestion 2Suppose a European call option to buy a share for $22.00 costs $1.50. The stock currently trades for $19.00. If the option is held to maturity under what conditions does the holder of the option make a profit? Note: ignore time value of money.A. When the price of the stock is greater than $22.00.B. When the price of the stock is greater than $23.50.C. When the price of the stock is greater than $20.50.Flag this QuestionQuestion 3The market price of ZYX stock has been volatile and you expect that volatility to continue for a few weeks based on recent news. Due to this belief you decide to purchase calls and puts to manage your exposure. You purchase a one-month call option with a strike price of $25 and an option price of $1.30. You also purchase a one-month put option with a strike price of $25 and an option price of $0.50. What will be your total profit or loss on these option positions if the stock price is $24.60 on the day the options expire?A. -$180B. $40C.

-$140Flag this QuestionQuestion 4Use two-state option pricing model to find the value of a call option and the intrinsic value given the following parameters:T-bills yield:4.0 pct.Current stock price:$44.00No possibility stock will be worth less this amount in one year:$42.00Exercise Price:$34.00A. Value of call = $11.31, Intrinsic Value = $2.00B. Value of call = $11.31, Intrinsic Value = $10.00C. Value of call = $9.31, Intrinsic Value = $10.00Flag this QuestionQuestion 5Given the following option quote information:CallsPutsOption and NY CloseExpirationStrike PriceVolumeLastVolumeLastXYZFebruary112857.55400.60March112618.55221.55May1122210112.85August112312.534.70The current stock price is $111.00 and the stock price on the expiration date is $125.00. How much is your options investment worth? (ignore commissions)A. $13,000.00B. $130.00C. $14,000.00Flag this QuestionQuestion 6Given the following parameters use put-call parity to determine the price of a put option with the same exercise price.Current stock price:$22.00Call option exercise price:$25.00Sales price of call options:$3.80Months until expiration of call options:6Risk free rate:2.2 percentCompounding:continuousA. Price of put option = $6.53B. Price of put option = $7.08C. Price of put option = $6.26Flag this QuestionQuestion 7Given the following parameters use risk-neutral valuation to value a call option.Current stock price:$65.00Stock will increase or decrease next year by:15 pct.Call Option strike price:$60.00Time to expiration:1 yearRisk free rate:8 pct.A. Value of call: $13.66B. Value of call: $9.44C. Value of call: $10.47Flag this QuestionQuestion 8A bond has 4 years to maturity, a coupon of 9 percent paid annually and currently sells at par. What is the duration of the bond?A. 3.53 yearsB. 3.74 yearsC. 4.90 yearsFlag this QuestionQuestion 9You have entered into a forward contract with the following parameters:Bond:5 year, zero coupon bondIssuance:Will be issued in 1 yearFace Value:$10001 year spot rate:3 pct.10 year spot rate:6 pct.A. Forward price = $704.96B. Forward price = $726.11C. Forward price = $769.68Flag this QuestionQuestion 10Use Black Scholes to Value the put and call given the following criteria. The stock price six months from the expiration of an option is $13.50, the exercise price of the option is $13, the risk free interest rate is 10 percent per annum, and the volatility is 20% per annum.A. c = 1.09, p = 0.44B. c = 0.50, p = 0.63C. c = 1.43, p = 0.30Ten multiple choice Finance questions:Question 1An investor buys a European put on a share for $1. The stock price is currently $21 and the strike price is $17. When does the investor make a profit?Flag this QuestionQuestion 2Suppose a European call option to buy a share for $22.00 costs $1.50. The stock currently trades for $19.00. If the option is held to maturity under what conditions does the holder of the option make a profit? Note: ignore time value of money.Flag this QuestionQuestion 3The market price of ZYX stock has been volatile and you expect that volatility to continue for a few weeks based on recent news. Due to this belief you decide to purchase calls and puts to manage your exposure. You purchase a one-month call option with a strike price of $25 and an option price of $1.30. You also purchase a one-month put option with a strike price of $25 and an option price of $0.50. What will be your total profit or loss on these option positions if the stock price is $24.60 on the day the options expire?Flag this QuestionQuestion 4Use two-state option pricing model to find the value of a call option and the intrinsic value given the following parameters:Flag this QuestionQuestion 5Given the following option quote information:CallsPutsOption and NY CloseExpirationStrike PriceVolumeLastVolumeLastXYZFebruary112857.55400.60March112618.55221.55May1122210112.85August112312.534.70The current stock price is $111.00 and the stock price on the expiration date is $125.00. How much is your options investment worth? (ignore commissions)Flag this QuestionQuestion 6Given the following parameters use put-call parity to determine the price of a put option with the same exercise price.Flag this QuestionQuestion 7Given the following parameters use risk-neutral valuation to value a call option.Flag this QuestionQuestion 8A bond has 4 years to maturity, a coupon of 9 percent paid annually and currently sells at par. What is the duration of the bond?Flag this QuestionQuestion 9You have entered into a forward contract with the following parameters:Flag this QuestionQuestion 10Use Black Scholes to Value the put and call given the following criteria. The stock price six months from the expiration of an option is $13.50, the exercise price of the option is $13, the risk free interest rate is 10 percent per annum, and the volatility is 20% per annum.