FIN 60804

Mr J has a bullish outlook on the stock price movement. What is the possible option strategies he can apply?

• Buying call options, selling put options, bull call spreads, bull put spreads
• Buying put options
• Selling call options
• Bear call spreads

Which of the following is a primary reason for a company to use futures contracts?

• Hedging against price fluctuations
• Diversifying investment portfolio
• Reducing operational costs
• Speculating on future price movements

Which strategy involves buying a futures contract at a lower price and selling it at a higher price to profit from price movements?

• Long call

• Arbitrage
• Speculating

• Hedging

Which of the following factors is most likely to have a significant impact on the movement of a stock index?

• Seasonal weather patterns

• Changes in individual stock prices within the index

• Localized events in a single small city

• The personal spending habits of a single investor

Which of the following factors is most likely to affect the price of Crude Palm Oil (CPO)?

• Technological advancements in electronics

• Changes in global soybean oil production

• The launch of a new smartphone

• Popularity of a new fashion trend

Which of the following best describes a bull call spread strategy in options trading?

• Buying a call option with a higher strike price and selling a call option with a lower strike price

• Buying a call option and selling a put option with the same strike price

• Buying a call option with a lower strike price and selling a call option with a higher strike price

• Selling a call option and buying a put option with the same strike price

Mr. A buys a call option (strike price of $3) with a premium of $0.50. Given that the stock price at maturity is $2.50, what is the possible gain/loss?

• Gain $1

• Gain $0.50

• Loss $1

• Loss $0.50

Mr. A buys a put option (strike price of $3.50) with a premium of $0.50. Given that the stock price at maturity is $2.50, what is the possible gain/loss?

• Gain $1

• Gain $0.50

• Loss $1

• Loss $0.50