Options And Corporate Finance

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Questions Bank

Introduction to Corporate Finance
Financial Statements,Taxes,and Cash Flow
Working With Financial Statements
Long-Term Financial Planning and Growth
Introduction to Valuation: The Time Value of Money
Discounted Cash Flow Valuation
Interest Rates and Bond Valuation
Stock Valuation
Net Present Value and Other Investment Criteria
Making Capital Investment Decisions
Project Analysis and Evaluation
Some Lessons From Capital Market History
Return,Risk,and the Security Market Line
Cost of Capital
Raising Capital
Financial Leverage and Capital Structure Policy
Dividends and Payout Policy
Short-Term Finance and Planning
Cash and Liquidity Management
Credit and Inventory Management
International Corporate Finance
Behavioral Finance: Implications for Financial Management
Enterprise Risk Management
Options and Corporate Finance
Option Valuation
Mergers and Acquisitions
Leasing

All Questions

Question 1

Free

Multiple Choice

Which one of the following grants its owner the right to buy or to sell an asset at a prespecified price at any time during a stated period?

Choose correct answer/s

option

forward contract

futures contract

swap

intrinsic contract

Check answer

Question 2

Free

Multiple Choice

Elizabeth owns a call option on 100 shares of Microsoft stock.She has decided to buy those shares.This purchase is commonly referred to as:

Choose correct answer/s

striking the asset.

expiring the option.

exercising the option.

putting the collar.

the collar option.

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Question 3

Free

Multiple Choice

Marti owns an option that allows him to purchase ABC stock at $50 a share.The $50 price is referred to as the:

Choose correct answer/s

opening price.

intrinsic value.

strike price.

market price.

time value.

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Question 4

Free

Multiple Choice

What is the final day on which an option can be exercised called?

Choose correct answer/s

payment date

ex-option date

opening date

expiration date

intrinsic date

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Question 5

Free

Multiple Choice

Felicia purchased an option which she can exercise anytime within the next six months.Which type of option did she purchase?

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market-ready

portable

daily

European

American

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Question 6

Multiple Choice

Brad purchased an option that he can only exercise on the final day of the option period.Which type of option did he purchase?

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European

American

inflexible

dated

pointed

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Question 7

Multiple Choice

Which of the following grants its owner the right to purchase an asset at a stated price?
I)American call
II)European call
III)American put
IV)European put

Choose correct answer/s

I only

I and II only

I and III only

II and IV only

III and IV only

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Question 8

Multiple Choice

The owner of a put option has the _____ an asset at a fixed price during a stated period of time.

Choose correct answer/s

right to sell

right to buy

obligation to sell

obligation to buy

obligation to trade

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Question 9

Multiple Choice

Which one of the following terms applies to the value of an option on its expiration date?

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strike price

upper limit

deadline price

time value

intrinsic value

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Question 10

Multiple Choice

Suzie is the controller of The Price Rite Company.She has been granted the right to buy 1,000 shares of her employer's stock at $25 a share anytime within the next three years.Which one of the following has Suzie been granted?

Choose correct answer/s

employee stock option

company bonus option

employee grant

employee exercise option

company benefits option

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Question 11

Multiple Choice

Which one of the following terms applies to an option that has an office building as its underlying asset?

Choose correct answer/s

financial option

liquid option

fixed option

real option

concrete option

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Question 12

Multiple Choice

The investment timing decision is the:

Choose correct answer/s

determination of when an option should be exercised.

decision of when to purchase an option on an underlying asset.

analysis of determining when an asset should be sold.

determination of when a project should be abandoned.

evaluation of the optimal time to begin a project.

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Question 13

Multiple Choice

Lucas Enterprises recently opted to open a new retail outlet.If the outlet outperforms the expectations,the manager can opt to increase the store's size.If it underperforms,the manager can opt to close the store.These choices that the manager has been given are called:

Choose correct answer/s

call options.

put options.

straddles.

managerial options.

executive options.

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Question 14

Multiple Choice

Which one of the following considers all of the options implicit in a project?

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expansion planning

contingency planning

asset management review

prospective evaluation

strategic evaluation

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Question 15

Multiple Choice

KT Enterprises has expanded its operations into a new field,which is the production of everyday dinnerware.If this project goes well,the firm has the option to expand its production into fine china.What type of option is this?

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financial

strategic

put

intangible

call

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Question 16

Multiple Choice

Amy is a current shareholder of DJ Industries.She has been given the right to purchase an additional 25 shares of DJ Industries stock at a price of $32 a share if she exercises that right within the next 12 months.What is this security called that Amy has been given?

Choose correct answer/s

convertible bond

warrant

straddle

spread

put

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Question 17

Multiple Choice

Jeff owns a $1,000 face value bond.He can exchange that bond for 25 shares of KNJ stock at any time within the next 2 years.What type of bond does Jeff own?

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secured

warranted

convertible

junk

callable

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Question 18

Multiple Choice

The dollar amount of a bond's par value that is exchangeable for one share of stock is called the:

Choose correct answer/s

conversion premium.

par value.

conversion value.

conversion price.

conversion ratio.

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Question 19

Multiple Choice

Alicia owns a $1,000 face value bond that can be converted into 20 shares of AB Limited stock.Which one of the following terms refers to these 20 shares?

Choose correct answer/s

conversion premium

straight bond value

conversion value

conversion price

conversion ratio

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Question 20

Multiple Choice

The difference between the conversion price and the current stock price,divided by the current stock price,is called the:

Choose correct answer/s

conversion premium.

straight bond value.

conversion value.

conversion price.

conversion ratio.

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Options And Corporate Finance

Which one of the following grants its owner the right to buy or to sell an asset at a prespecified price at any time during a stated period?

Elizabeth owns a call option on 100 shares of Microsoft stock.She has decided to buy those shares.This purchase is commonly referred to as:

Marti owns an option that allows him to purchase ABC stock at $50 a share.The $50 price is referred to as the:

What is the final day on which an option can be exercised called?

Felicia purchased an option which she can exercise anytime within the next six months.Which type of option did she purchase?

Brad purchased an option that he can only exercise on the final day of the option period.Which type of option did he purchase?

Which of the following grants its owner the right to purchase an asset at a stated price?I)American callII)European callIII)American putIV)European put

The owner of a put option has the _____ an asset at a fixed price during a stated period of time.

Which one of the following terms applies to the value of an option on its expiration date?

Suzie is the controller of The Price Rite Company.She has been granted the right to buy 1,000 shares of her employer's stock at $25 a share anytime within the next three years.Which one of the following has Suzie been granted?

Which one of the following terms applies to an option that has an office building as its underlying asset?

The investment timing decision is the:

Lucas Enterprises recently opted to open a new retail outlet.If the outlet outperforms the expectations,the manager can opt to increase the store's size.If it underperforms,the manager can opt to close the store.These choices that the manager has been given are called:

Which one of the following considers all of the options implicit in a project?

KT Enterprises has expanded its operations into a new field,which is the production of everyday dinnerware.If this project goes well,the firm has the option to expand its production into fine china.What type of option is this?

Amy is a current shareholder of DJ Industries.She has been given the right to purchase an additional 25 shares of DJ Industries stock at a price of $32 a share if she exercises that right within the next 12 months.What is this security called that Amy has been given?

Jeff owns a $1,000 face value bond.He can exchange that bond for 25 shares of KNJ stock at any time within the next 2 years.What type of bond does Jeff own?

The dollar amount of a bond's par value that is exchangeable for one share of stock is called the:

Alicia owns a $1,000 face value bond that can be converted into 20 shares of AB Limited stock.Which one of the following terms refers to these 20 shares?

The difference between the conversion price and the current stock price,divided by the current stock price,is called the:

Which of the following grants its owner the right to purchase an asset at a stated price?
I)American call
II)European call
III)American put
IV)European put