Question

21. The writer of a put option A. Agrees to sell shares at a set price if the option holder desires B. Agrees to buy shares at a set price if the option holder desires C. Has the right to buy shares at a set price D. Has the right to sell shares at a set price E. None of the above 22. Advantages of exchange-traded options over Over-The-Counter options include all but which one of the following? A. Ease and low cost of trading B. Anonymity of participants C. Contracts that are tailored to meet the needs of market participants D. Little or no concern about counterparty credit risk E. All of the above are advantages of exchange-traded options 23. A put option on Walmart stock has an exercise price of $45. The current stock price is $41. The put option is A. At the money B. In the money C. Out of the money D. Knocked out E. None of the above 24. You buy the stock of Canada Goose and write a call option on Canada Goose. This strategy is called a A. Covered call B. Long straddle C. Naked call D. Money spread E. None of the above

questions 21-24 please

Answer 1

answer 21

(A) agrees to sell shares at a set price if the option holder desires

put writer has the obligation to sell shares against the buyer who has the right weather to buy or not buy from writer

answer 22

(C) contracts are not tailored according to the exchange traded options instead they are traded in a standardized lots as decided by the exchange (NYSE)

answer 23

(B) it is an IN THE MONEY option since excercise price is greater than the market price it is in the money in the case of Put option

answer 24

(A) it is a perfect example of covered call in which the seller of call option covers the option through buying the corresponding shares from the market