1. A type of fund that invests in real estate and/ or mortgages is known as.
A) REIT
B ) ETF
C) Sector Fund
D) Hedge fund
2. Lew paid $300 to purchase a call on Delta stock with a strike price of $25. What does the market price of Delta have to be for Lew to break-even on his option investment? Ignore transaction costs and taxes.
A) $22
B) $ 25
C) $28
D) cannot be determined
3. When two series of numbers generally move in opposite direction, the series are
A) positively correlated
B) uncorrelated
C) negativity correlated
D ) Perfectly positivity correlated
4. Which one of the following securities has the lowest level of risk?
A) corporate bond
B) US Treasury bill
C) small-cap stock
D ) large-cap stock
5. One reason that writing options can be a viable and profitable investment strategy is that.
A) the option writer collects the quarterly dividend
B) most options expire unexercised
C) an option writer determines when the option is exercised
D) An option writer can exercise the option to avoid a potential loss.