Question about Quiz Feedback - PRM-I

edupristine
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Joined: Wed Apr 09, 2014 6:28 am

Question about Quiz Feedback - PRM-I

Postby edupristine » Mon Feb 16, 2015 7:29 am

Hi, in your query question: "Suppose you believe that Company A's stock price is going to decline from its current level of $82.50 during the next 5 months. For $510.25, you could buy a 5-month put option giving you the right to sell 100 shares at a price of $83.00 per share. If you bought the put option contract for $510.25 and Company A's stock price actually dropped to $63.00, your profit net of the premium paid would be? Choose one answer."
The correct solution is C. Your query has been resolved.

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

Question about Quiz Feedback - PRM-I

Postby edupristine » Mon Feb 16, 2015 7:32 am

Hi, in your query question: "Which of the following is least likely to be true?
Select one:
a. The desirability of writing a covered call to enhance income depends upon the chance that the stock price will exceed the exercise price at which the trader writes the call.
b. A covered call is an investment management technique designed to protect a stock from a decline in value
c. When an investor feels the stock’s price will not go up any time soon, and he wants to increase his income by collecting the call option premium, he will write a covered call. "

The correct answer is B because question is asking "LEAST" likely which means which of these is false.

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

Question about Quiz Feedback - PRM-I

Postby edupristine » Mon Feb 16, 2015 7:35 am

Hi, in your query question: "Which of the following is true about option strategies?
Select one or more:
a. Bull spread involves selling a call option on a stock with a certain stock price and buying a call option on the same stock with a higher strike price
b. Bear spread involves selling a put option on a stock with a certain stock price and buying a put option on the same stock with a higher strike price Correct
c. Both A and B
d. None of these"
The correct answer is A only. sorry for the convenience caused. Your query has been resolved.

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

Question about Quiz Feedback - PRM-I

Postby edupristine » Mon Feb 16, 2015 7:38 am

Hi, answer to your query question : "An investor expects the stock price to decrease and wants to limit his/her downside risk while agreeing to get a limited upside potential. Which of the following four strategies should he/she choose?"
Is option A. your query has been resolved. Thank You.


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