金融英语考试选择题练习(18)
Passage Three
An option contract is a risk management or control tool designed to mitigate the effects of possible adverse movements in the price of a security or commodity. Depending upon the right acquired by the taker, options are divided into "calls" and "puts". A call option gives the taker (just the buyer of the option) the right (but not the obligation) to buy at a fixed price, while a put option confers upon him the right (but not the obligation) to sell at a fixed price. The fixed price at which the taker may buy or sell the underlying commodity or security, a procedure known as exercising the option, is called the striking price. If the striking price is identical to the current market price of the commodity or security (i.e. the prevailing price for delivery and payment on expiration date), the option is said to be at the money. When the striking price of a call option is lower than the current market price it is in the money. When it is higher than current market price it is out of the money. In contrast, the put option is in the money when the striking price is higher than the current market price or out of the money when the striking prices lower than the current market price.
It will by now clear that there are two basic prices in an options contract, the price paid for the
purchase of the actual option, which is the premium, and the fixed price at which the option may be exercised, which is the striking price. In turn, the price of the premium is itself made up of two component parts, the intrinsic value and extrinsic value (often known as the time value). Intrinsic value may be defined as the amount by which an option is in the money. The calculation of a proper time value for an option is far more complex. It is influenced by four different factors ----the duration of the option, the historical price volatility of the underlying commodity or security, current interest rates and the supply of and demand for the option.
70. Depending on _________, options are divided into "calls" and "puts".
A. the right acquired by the seller
B. the right acquired by the buyer
C. the obligation acquired by the seller
D. the obligation acquired by the seller
71. A put option_____________.
A. gives the buyer the right to sell the underlying commodity at a fixed price
B. gives the seller the right to buy the underlying commodity at a fixed price
C. confers upon the seller the right to buy the underlying commodity at fixed price.
D. confers upon the seller the right to sell the underlying commodity at fixed price.
72. When the striking price of the put option is higher than the current market price, it is called
A. at the money
B. in the money
C. out of the money
D. none of the money
73. The premium in option_____________.
A. is the striking price of the underlying commodity
B. means the option is sold at par value
C. is just the margin that all option deals demand
D. is the price of an option contract
74. Which of the following statement is not true?
A. The premium consists of the intrinsic value and the extrinsic value
B. The extrinsic value is just the time value.
C. The time value for an option is only influenced by the duration of the option and current interest rates.
D. The intrinsic value is just the amount by which an option is in the money.
An option contract is a risk management or control tool designed to mitigate the effects of possible adverse movements in the price of a security or commodity. Depending upon the right acquired by the taker, options are divided into "calls" and "puts". A call option gives the taker (just the buyer of the option) the right (but not the obligation) to buy at a fixed price, while a put option confers upon him the right (but not the obligation) to sell at a fixed price. The fixed price at which the taker may buy or sell the underlying commodity or security, a procedure known as exercising the option, is called the striking price. If the striking price is identical to the current market price of the commodity or security (i.e. the prevailing price for delivery and payment on expiration date), the option is said to be at the money. When the striking price of a call option is lower than the current market price it is in the money. When it is higher than current market price it is out of the money. In contrast, the put option is in the money when the striking price is higher than the current market price or out of the money when the striking prices lower than the current market price.
It will by now clear that there are two basic prices in an options contract, the price paid for the
purchase of the actual option, which is the premium, and the fixed price at which the option may be exercised, which is the striking price. In turn, the price of the premium is itself made up of two component parts, the intrinsic value and extrinsic value (often known as the time value). Intrinsic value may be defined as the amount by which an option is in the money. The calculation of a proper time value for an option is far more complex. It is influenced by four different factors ----the duration of the option, the historical price volatility of the underlying commodity or security, current interest rates and the supply of and demand for the option.
70. Depending on _________, options are divided into "calls" and "puts".
A. the right acquired by the seller
B. the right acquired by the buyer
C. the obligation acquired by the seller
D. the obligation acquired by the seller
71. A put option_____________.
A. gives the buyer the right to sell the underlying commodity at a fixed price
B. gives the seller the right to buy the underlying commodity at a fixed price
C. confers upon the seller the right to buy the underlying commodity at fixed price.
D. confers upon the seller the right to sell the underlying commodity at fixed price.
72. When the striking price of the put option is higher than the current market price, it is called
A. at the money
B. in the money
C. out of the money
D. none of the money
73. The premium in option_____________.
A. is the striking price of the underlying commodity
B. means the option is sold at par value
C. is just the margin that all option deals demand
D. is the price of an option contract
74. Which of the following statement is not true?
A. The premium consists of the intrinsic value and the extrinsic value
B. The extrinsic value is just the time value.
C. The time value for an option is only influenced by the duration of the option and current interest rates.
D. The intrinsic value is just the amount by which an option is in the money.