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CA Final Option (Finance) — practice questions

Explore 69 free Option (Finance) questions in CA Final Strategicfinancialmanagement. Open each question or exercise to read its content, reference answers and available explanation.

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Option (Finance) questions and exercises with answers

Showing questions 1–30 of 69.

The strike price of an option is also called its what?Read the answer and worked solution →The total amount paid by the option holder to the writer is called the what?Read the answer and worked solution →What is the expiration date of an option?Read the answer and worked solution →An American option may be exercised when?Read the answer and worked solution →A Bermudan option can be exercised on which dates?Read the answer and worked solution →The payoff of an Asian option depends on which quantity?Read the answer and worked solution →What is the defining feature of a barrier option?Read the answer and worked solution →A binary option is best described as which type?Read the answer and worked solution →What happens when a cash-settled option is exercised?Read the answer and worked solution →A buyer pays a premium of Rs 6 per share on a call covering 100 shares. What is the buyer's maximum loss?Read the answer and worked solution →Which position carries a theoretically unlimited loss?Read the answer and worked solution →A call has strike Rs 100 and premium Rs 5. The stock ends at Rs 112. Net profit per share?Read the answer and worked solution →A put has strike Rs 80 and premium Rs 4. What is the buyer's break-even price at expiry?Read the answer and worked solution →A trader writes a put with strike Rs 40 and receives Rs 3. What is the largest possible loss per share?Read the answer and worked solution →What is the maximum profit of a call writer?Read the answer and worked solution →Holding a stock and selling a call on it is called what?Read the answer and worked solution →Buying a put while holding the underlying stock is called what?Read the answer and worked solution →A stock is bought at Rs 100 along with a put of strike Rs 95 costing Rs 2. What is the maximum loss per share?Read the answer and worked solution →Which strategy sells both a put and a call at the same exercise price?Read the answer and worked solution →How does a strangle differ from a straddle?Read the answer and worked solution →A trader buys a call at Rs 3 and a put at Rs 2, both with strike Rs 50. What are the two break-even prices at expiry?Read the answer and worked solution →A long butterfly spread profits most when the stock ends where?Read the answer and worked solution →A call has strike Rs 150 and the stock trades at Rs 162. What is its intrinsic value?Read the answer and worked solution →A put has strike Rs 50, spot is Rs 42 and the premium is Rs 10. What is its time value?Read the answer and worked solution →Which of these is a factor in standard option valuation models?Read the answer and worked solution →Employee stock options are mainly used as what?Read the answer and worked solution →In US markets, one option contract usually represents how many shares?Read the answer and worked solution →For a non-dividend stock, put-call parity says C minus P equals what?Read the answer and worked solution →A stock is Rs 100, the call is Rs 12 and the present value of the strike is Rs 95. By put-call parity, what is the put price?Read the answer and worked solution →A call costs Rs 9, a put costs Rs 4 and the stock is Rs 60. What is the present value of the strike?Read the answer and worked solution →

Worked practice questions

The strike price of an option is also called its what?

  1. Spot price
  2. Closing price
  3. Exercise price
  4. Market price
Show answer and solution

Correct answer: C. Exercise price

The strike is the price at which the underlying transaction happens on exercise, so it is also the exercise price.

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The total amount paid by the option holder to the writer is called the what?

  1. Strike
  2. Margin
  3. Expiry value
  4. Premium
Show answer and solution

Correct answer: D. Premium

The price paid for acquiring the option contract is its premium.

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What is the expiration date of an option?

  1. The last date it can be exercised
  2. The date the premium is paid
  3. The date the strike is fixed
  4. The first date it can be sold
Show answer and solution

Correct answer: A. The last date it can be exercised

The expiry marks the final day on which the option holder may exercise the right.

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