Site MapHelpFeedbackFundamentals of Corporate Finance: Multiple Choice Quiz
Multiple Choice Quiz
(See related pages)



1

The act of buying or selling the underlying asset via the option contract is called exercising the option.
A)True
B)False
2

An arbitrage is an opportunity for riskless profit.
A)True
B)False
3

The greater the variance of the underlying asset, the less a call option is worth.
A)True
B)False
4

Equity can be viewed as a call option on a firm's assets.
A)True
B)False
5

A convertible bond is the same thing as a bond with warrants.
A)True
B)False
6

A convertible bond's conversion premium is the number of shares per bond received for conversion into stock.
A)True
B)False
7

The conversion premium on a convertible bond is the difference between the conversion price and the current stock price, divided by the current stock price.
A)True
B)False
8

The Green Shoe provision that is frequently used in initial public offerings is one type of a call option.
A)True
B)False
9

A contract that gives its owner the right to buy or sell an asset at a fixed price on or before a given date is called a(n) .
A)swap
B)debenture
C)convertible bond
D)option
E)forward contract
10

If you exercise a put option prior to expiration you:
A)Are obligated to sell the asset underlying the option contract at the option strike price.
B)Must have been the writer of the option when it was created.
C)Will receive less than you would if you let the option run to maturity.
D)Have behaved in a rational manner if the market price exceeds the strike price.
E)Must own a European option.





To learn more about the book this website supports, please visit its Information Center.
(c)2003 McGraw-Hill Higher Education
Any use is subject to the Terms of Use and Privacy Policy.
McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.


Fundamentals of Corporate FinaOnline Learning Center with Powerweb

Home > Chapter 14 > Multiple Choice Quiz