WorksheetsCommodity and Derivative
Total questions: 35
Worksheet time: 20mins
A call option's premium minus its intrinsic value is known as its:
exercise price
strike price
expiration value
time value
In a call option contract, the price at which the option owner can buy the underlying stock is called the:
option's premium
option's exercise price
option's strike price
underlying asset's price
Last month, Mary bought a call option on ABC Corp. stock, having an exercise price of $30. Mary paid $1 for this call. Today, ABC stock is trading at $40 per share. Which of the following is true?
Mary has now realized a $10 profit.
Mary has now realized a $10 loss.
Mary's option is out of the money.
Mary's option is in the money.
A call option exists on the stock of Macroswift Corporation. The exercise price is $45. Right now the call option can be purchased for $7. Macroswift stock is currently selling for $50 per share. What is the current "premium" on the call option?
$7
$0
$3
$2
A call option exists on the stock of Macroswift Corporation. The exercise price is $45. Right now the call option can be purchased for $7. Macroswift stock is currently selling for $50 per share. What is the "intrinsic value" of the call option?
$0
$3
$2
$5
When someone "writes" a call option, he/she has:
taken a "long" position in a futures contract.
"marked to market" a futures contract.
sold a call option.
bought a call option.
When you sell a call option without the underlying stock. The position will give you
limited risk and limited profit
limited risk and unlimited profit
unlimited risk and limited profit
unlimited risk and unlimited profit
What is European PUT Option
Gives the holder the obligation to sell underlying asset only at expiry date
Gives the holder the right to sell underlying asset only at expiry date
Gives the holder the right to sell underlying asset anytime before expiry date
Gives the holder the obligation to sell underlying asset anytime before expiry date
OPTION WHICH WE ONLY EXECUTE AT THE TIME OF ITS MATURITY
AMERICAN OPTION
EUROPEAN OPTION
INDIAN OPTION
NONE
What is the difference between options and futures?
Futures are about obligations of both parties that they will have to fulfill in the future, whereas options are about obligations of both parties that they have to fulfill at present
Futures are about rights of both parties, not about obligations, whereas options are about obligations of both parties only
There is no difference. Futures and options are similar contracts in nature.
None is correct
The fixed price in an option contract at which the owner can buy or sell the underlying asset is called the option's:
opening price.
intrinsic value.
strike price.
market price.
The act where an owner of an option buys or sells the underlying asset, as is his right, is called ______ the option.
striking
exercising
opening
splitting
A financial contract that gives its owner the right, but not the obligation, to buy or sell a specified asset at an agreed-upon price on or before a given future date is called a(n) _____ contract.
option
future
forward
swap
The main difference between a forward contract and a cash transaction is:
only the cash transaction creates an obligation to perform.
a forward is performed at a later date while the cash transaction is performed immediately.
only one involves a deliverable instrument.
neither allows for hedging.
What is a good definition of a derivative?
The principal amount of debt between two parties
The difference between the cost and value of stock
A contract to borrow money for a business
A contract between two or more parties whose value is based on an agreed-upon underlying financial asset
Commodities are generally viewed as a lower risk investment than a stock and bonds.
True
False
Which is NOT an example of a Commodity?
Coffee
Oil
Automobiles
Gold
An option contract giving the owner the right, but not the obligation, to buy a stock in the future is
a Put
a Call
a Commodity
an Alternative
From the following which is the riskiest..
Future
Put option
Call option
Cash segment
Derivatives help to manage possible future risks especially against the fluctuation of price risk. This is
Speculation
Arbitraging
Hedging
None is correct
A call option is a right to
force another party to buy the underlying security.
repurchase a previously sold underlying security.
sell the underlying security.
buy the underlying security.
What kind of settlement usually applied if the investors are trading the derivatives for speculation purposes?
Physical settlement
Cash settlement
Hedging
Return
Which of the following is NOT a derivative
Single Stock Futures (SSFs)
Swap
Crude Palm Oil
Put Options
The clearing house is important for futures markets because
It decreases counterparty risk
It allows a better regulatory supervision
It helps customize the settlement of trades
Maintenance margin is
A margin below which the trader’s margin may not fall
Funds deposited to provide capital to absorb losses
A margin to insurance the maintenance of each trade
What is margin?
non-refundable funds deposited as a good gesture
non-refundable funds deposited to open a position and keep it open
refundable funds deposited to close positions
refundable funds deposited to open and hold a position
None of the above
A trader executes a buy trade on 10/08/2020 and sells his position on 20/03/2021. What kind of a trade is this?
Position
Scalping
Swing
Day
Momentum
A trader executes a buy trade at 10:15 AM and sells the stock at 2:30 PM on 20/03/2021. What kind of a trade is this?
Position
Scalping
Swing
Day
Momentum
______and _____ drives the commodities market
stocks and bonds
supply and demand
economy and imports
demand and economy
What the two types of commodities ?
soft & hard commodities
hard & paper commodities
soft and agriculture commodities
hard and metal commodities
Which is NOT one of the broad categories for commodities
energy
livestock
gas
metal
Hard commodity can be define as
natural resources that are grown
natural resources that must be mined or extracted
the oldest type trade
secondary goods that are sold
An example of soft commodity is
oil
rubber
gold
cattle
An example of hard commodity is
coffee
rice
hog
rubber
What is commodity
any raw material or agriculture product
stock and bond that are bought and sold
oil and money that are exchange in the market
natural gas to create petrol
