Finance

Options allow investors to speculate on price movements without a large initial investment.

Options allow investors to speculate on price movements without a large initial investment.

Options allow investors to speculate on price movements without a large initial investment.

▸ true

▸ false

Jennthejelly   29   1 Reply

allegri87

It is riskier to buy an option than to write an option.

It is riskier to buy an option than to write an option.

It is riskier to buy an option than to write an option.

▸ true

▸ false

prpnum1   26   1 Reply

kniemeier2

Investors who purchase options acquire nothing more than the right to buy or sell the shares of the ...

Investors who purchase options acquire nothing more than the right to buy or sell the shares of the ...

Investors who purchase options acquire nothing more than the right to buy or sell the shares of the underlying security.

▸ true

▸ false

ogf78   30   1 Reply

elacevedo

Because puts and calls derive their value from the behavior of some other real or financial asset, ...

Because puts and calls derive their value from the behavior of some other real or financial asset, ...

Because puts and calls derive their value from the behavior of some other real or financial asset, they are known as derivative securities.

▸ true

▸ false

scigeekalic   34   1 Reply

Hollywood1971

Writers of option contracts

Writers of option contracts

[html]Writers of option contracts

▸ have a limited liability specified in the contract.

▸ hope to exercise the option on favorable terms.

▸ earn a commission no matter what subsequently happens to the contract.

▸ earn a profit when the option exp

kady   24   1 Reply

lpants

Which one of the following statements concerning options is correct?

Which one of the following statements concerning options is correct?

[html]Which one of the following statements concerning options is correct?

▸ One option covers 1,000 shares of stock.

▸ A put gives the option holder the right to buy a stated amount of securities.

▸ The owner of a call is entitled to the dividend

ScienceForte   39   1 Reply

Zigdog4400

Which of the following statements concerning put options are correct?

Which of the following statements concerning put options are correct?

[html]Which of the following statements concerning put options are correct?

▸ The writer of a put profits if the price of the underlying stock rises.

▸ The writer of a put profits if the price of the underlying stock falls.

▸ The owner of a put pr

szehim2009   21   1 Reply

michaelfidanza

Which of the following is true about rights?

Which of the following is true about rights?

[html]Which of the following is true about rights?

▸ They are usually attached to bonds as a "sweetener."

▸ The owner has several years in which to exercise the option.

▸ They are a type of short-lived call option.

▸ They are a type of short-live

mariasmakatof   24   1 Reply

mattyca001

Warrants are generally created when

Warrants are generally created when

[html]Warrants are generally created when

▸ a firm decides to execute a stock split.

▸ the issuing corporation decides to sweeten a bond issue.

▸ a LEAP expires and automatically converts.

▸ a financial institution decides to create them based on

abdallaex   32   1 Reply

karatins

Warrants

Warrants

[html]Warrants

▸ provide substantially less capital appreciation potential than the underlying stock.

▸ tend to be quite costly.

▸ have a stipulated price and an expiration date.

▸ are not traded in the secondary markets because of their low unit

jugganuts   26   1 Reply

mkql12

The writer of a put or call is the

The writer of a put or call is the

[html]The writer of a put or call is the

▸ the institution that brings buyers and sellers of an option together in a transaction.

▸ can limit risk by letting the option expire unexercised.

▸ party who agrees to buy or sell the underlying stock if

msidhu   28   1 Reply

mlwpcd

The ability to obtain a given equity position at a reduced capital investment, and therefore magnify ...

The ability to obtain a given equity position at a reduced capital investment, and therefore magnify ...

The ability to obtain a given equity position at a reduced capital investment, and therefore magnify returns, is known as

▸ leverage.

▸ straddling.

▸ hedging.

▸ triple witching.

Katie32   33   1 Reply

Gimor1220

Purchasers of stock options

Purchasers of stock options

[html]Purchasers of stock options

▸ own a financial asset with benefits of firm ownership.

▸ have a claim on the profits of the firm issuing the underlying securities.

▸ have the obligation to buy or sell a predetermined amount of shares at the st

jtfortwengler   19   1 Reply

pipi123

One reason that writing options can be a viable and profitable investment strategy is that

One reason that writing options can be a viable and profitable investment strategy is that

[html]One reason that writing options can be a viable and profitable investment strategy is that

▸ the option writer collects the quarterly dividends.

▸ many options expire unexercised.

▸ an option writer determines when the option is exercised.

rventurec   23   1 Reply

gronk44

LEAPS is an acronym for

LEAPS is an acronym for

LEAPS is an acronym for

▸ Lehman and Ellsworth Authority Strips.

▸ Liability & Equity Asset Securities.

▸ LYONS Earnings Anticipation Stocks.

▸ Long-Term Equity Anticipation Securities.

fashunluvr24   18   1 Reply

dcmc92

LEAPS are a special type of option

LEAPS are a special type of option

[html]LEAPS are a special type of option

▸ that must be exercised within six months.

▸ that can only be exercised on the expiration date.

▸ that cannot be exercised for at least a year after it is is purchased.

▸ that may have an expiration date

Melly767   16   1 Reply

daniboi

An American call option gives the owner

An American call option gives the owner

[html]An American call option gives the owner

▸ the right to buy or sell the stock at the strike price on or before the expiration date.

▸ the right but not the obligation to buy the stock at the strike price on or before the expiration date.

▸ th

yosie   18   1 Reply

isababycookie

Warehousing liquidity protects a portion of the portfolio from market fluctuations.

Warehousing liquidity protects a portion of the portfolio from market fluctuations.

Warehousing liquidity protects a portion of the portfolio from market fluctuations.

▸ true

▸ false

pharmdwannabe   33   1 Reply

GlitterBug11

The maximum capital loss that can be applied to ordinary income for income tax purposes in any one ...

The maximum capital loss that can be applied to ordinary income for income tax purposes in any one ...

The maximum capital loss that can be applied to ordinary income for income tax purposes in any one year is $3000.

▸ true

▸ false

marmech12   40   1 Reply

realistpnoy

Over a period of time if an investment has not met its return objective, it should be sold.

Over a period of time if an investment has not met its return objective, it should be sold.

Over a period of time if an investment has not met its return objective, it should be sold.

▸ true

▸ false

bluejean   34   1 Reply

Ama1911

If an investor has a loss position in an investment and wants to sell it, the best time to sell for ...

If an investor has a loss position in an investment and wants to sell it, the best time to sell for ...

If an investor has a loss position in an investment and wants to sell it, the best time to sell for tax purposes is when a capital gain is available against which the loss can be applied.

▸ true

▸ false

Yukinara   34   1 Reply

heavenlyangel

Capital losses up to $5,000 on stock sales can be used to offset the taxes on ordinary income.

Capital losses up to $5,000 on stock sales can be used to offset the taxes on ordinary income.

Capital losses up to $5,000 on stock sales can be used to offset the taxes on ordinary income.

▸ true

▸ false

vanessavz   28   1 Reply

someonespecial

A stop-loss order guarantees that an investor's unrealized profit will be protected.

A stop-loss order guarantees that an investor's unrealized profit will be protected.

A stop-loss order guarantees that an investor's unrealized profit will be protected.

▸ true

▸ false

tweb28   28   1 Reply

bryrdan

Which of the following are reasons why a person may want to warehouse liquidity?I.protect against ...

Which of the following are reasons why a person may want to warehouse liquidity?I.protect against ...

[html]Which of the following are reasons why a person may want to warehouse liquidity?

I.

mlee52381   36   1 Reply

bizmailova

Which of the following are characteristics of stop-loss orders?I.the risk of whipsawingII.the ...

Which of the following are characteristics of stop-loss orders?I.the risk of whipsawingII.the ...

[html]Which of the following are characteristics of stop-loss orders?

I.

henry11   43   1 Reply

mnnewman

The two primary media for warehousing liquidity are

The two primary media for warehousing liquidity are

[html]The two primary media for warehousing liquidity are

▸ money market mutual funds and money market deposit accounts.

▸ certificates of deposit and short-term bond funds.

▸ certificates of deposit and long-term bond funds.

▸ short-term bond fu

viva902   31   1 Reply

lnvolley24

The primary risk in using a GTC limit sell order rather than a market order is that

The primary risk in using a GTC limit sell order rather than a market order is that

[html]The primary risk in using a GTC limit sell order rather than a market order is that

▸ the market price may exceed the limit price when the order is placed.

▸ the limit order may not be executed.

▸ the limit order may be executed at a price a

srsbiz   64   1 Reply

Aldrich E

Suppose the shares of the Chickadee Corporation traded seven times in the following sequence one day ...

Suppose the shares of the Chickadee Corporation traded seven times in the following sequence one day ...

[html]Suppose the shares of the Chickadee Corporation traded seven times in the following sequence one day last week: 46, 45.88, 45.75, 45.50, 45.63, 46, 46.13. In this case, a limit order to sell at 46 would have been executed

▸ between 46 and 46.1

ssi15   24   1 Reply

Chintan13

One important tax rule concerning capital losses is that

One important tax rule concerning capital losses is that

[html]One important tax rule concerning capital losses is that

▸ capital losses are always fully deductible.

▸ a maximum of $3,000 of losses in excess of capital gains can be written off against ordinary income in any one year.

▸ a maximum of $10,

zbuild007   23   1 Reply

hhorton

Emily's marginal tax rate is 28%. She will have $100,000 in taxable income before any stock ...

Emily's marginal tax rate is 28%. She will have $100,000 in taxable income before any stock ...

[html]Emily's marginal tax rate is 28%.  She will have $100,000 in taxable income before any stock transactions.  If she sells stock at long-term losses totaling $2,500 , her losses will reduce her taxes by

▸ $2,500.

▸ $840.

▸ $700.

▸ No reductio

bigben0007   34   1 Reply

relisabeth

Alex bought 100 shares of CBG corporation at $20 per share. It is now selling at $50 and Alex has ...

Alex bought 100 shares of CBG corporation at $20 per share. It is now selling at $50 and Alex has ...

[html]Alex bought 100 shares of CBG corporation at $20 per share.  It is now selling at $50 and Alex has placed a stop loss order at $47.50, good til canceled.  Which of the following is true?

▸ If the price falls to $40, there is a high probability

teyodani   45   1 Reply

ksweet

A stop loss order may not protect an investor's profits if

A stop loss order may not protect an investor's profits if

[html]A stop loss order may not protect an investor's profits if

▸ the price drops even slightly below the stop price before the order can be executed.

▸ the price enters a prolonged period of gradual decline.

▸ an unexpected event cause the price

smithc52   48   1 Reply

david200095367

Late in the calendar year, Jessica must choose between selling stock that was purchased 2 years ago ...

Late in the calendar year, Jessica must choose between selling stock that was purchased 2 years ago ...

[html]Late in the calendar year, Jessica must choose between selling stock that was purchased 2 years ago for $10,000 and has fallen to $7,000 or a different stock that was purchased 1 year ago for $5,000 and has risen to $7,000.  If the investor has

melisooflyy   44   1 Reply

pipi123

Explain the use of limit orders and stop-loss orders in rebalancing an investor's stock portfolio. ...

Explain the use of limit orders and stop-loss orders in rebalancing an investor's stock portfolio. ...

Explain the use of limit orders and stop-loss orders in rebalancing an investor's stock portfolio. What are the principal risks in using these orders?

jarzola   36   1 Reply

Sirangelou

Successful portfolio management with a variable ratio plan depends on the investor's skill in ...

Successful portfolio management with a variable ratio plan depends on the investor's skill in ...

Successful portfolio management with a variable ratio plan depends on the investor's skill in timing the market.

▸ true

▸ false

j22   31   1 Reply

bluepeachez36

Investors who use formula plans believe that they have above average ability to time the market and ...

Investors who use formula plans believe that they have above average ability to time the market and ...

Investors who use formula plans believe that they have above average ability to time the market and pick successful investments.

▸ true

▸ false

drw92   33   1 Reply

Saharak

Formula plans are high-risk investment strategies that attempt to benefit from cyclical price movements.

Formula plans are high-risk investment strategies that attempt to benefit from cyclical price movements.

Formula plans are high-risk investment strategies that attempt to benefit from cyclical price movements.

▸ true

▸ false

szehim2009   31   1 Reply

gronk44

Dollar cost averaging is a formula plan which automatically causes investors to purchase more shares ...

Dollar cost averaging is a formula plan which automatically causes investors to purchase more shares ...

Dollar cost averaging is a formula plan which automatically causes investors to purchase more shares when the price is low and purchase fewer shares when the price is high.

▸ true

▸ false

dove298   45   1 Reply

onid

Dollar cost averaging is a formula plan to purchase the same number of shares of stock at regular ...

Dollar cost averaging is a formula plan to purchase the same number of shares of stock at regular ...

Dollar cost averaging is a formula plan to purchase the same number of shares of stock at regular intervals of time.

▸ true

▸ false

NeuroJuice   42   1 Reply

djbo89

A constant-ratio plan requires an investor to periodically rebalance the portfolio.

A constant-ratio plan requires an investor to periodically rebalance the portfolio.

A constant-ratio plan requires an investor to periodically rebalance the portfolio.

▸ true

▸ false

booboo123   28   1 Reply

nilabmirzada