Question

1.

A securities contract is formed when two parties:. Single choice.

A. Sign the document

B. Notify the client of the trade valuation.

C. Transfer the security for the cash

D. Agree on the trade essentials and exchange promises.

2.

An investor looking to secure a minimum sale price for his assets, but still leave potential for future profit would:. Single choice.

A. Buy a call option

B. Buy a put option

C. Buy a future

D. Sell a future

3.

How much does the buyer of an option pay to acquire the right under the option?. Single choice.

A. The premium

B. The strike or exercise price

C. The full nominal value of the contract

D. The tick value for the contract

Please answer all these 3!!

Answer 1

1. D. Agree on the trade essentials and exchange promises.

As the securities contract is done when all the needs or mandatory steps mentioned by the exchange is done and all trade essentials are fulfilled.

2. B. Buy a put option

In put option we take a strike price which is a minimum sale price for the asset and if the asset perform good in the future then we don't exercise the option and can sell at an higher rate.

3. A. The premium

In options we just have to pay the premium of option and we get the right to buy / sell, as per the option.