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Act of Buying and Selling Assignment
Act of Buying and Selling Assignment
Order ID 53003233773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages to Order 5-10 Pages Description/Paper Instructions
Act of Buying and Selling Assignment
1) Arbitrage is the act of simultaneously buying and selling in two markets to take advantage of price differentials.
Question 1 options:
a) True
b) False2) The writer of a naked call option wants
Question 2 options:
a) the prices of the stock and the call to rise
b) the prices of the stock and the call to fall
c) the prices of the stock to fall and the call to rise
d) the prices of the stock to rise and the call to remain stable
3) Stock index options
1. permit the investor to short the market instead of individual stocks
2. require delivery of an index of stocks
3. limit the buyer’s potential loss to the cost of the option
Question 3 options:
a) 1 and 2
b) 1 and 3
c) 2 and 3
d) all of the above
4) Calls tend to sell for a time premium that exceeds the stock’s price.
Question 4 options:
a) True
b) False
5) The value of a put rises as the price of
Question 5 options:
a) stock rises
b) a call falls
c) stock falls
d) a call rises
6) If an investor constructs a covered call,
Question 6 options:
a) there is no limit to the potential profitb) risk is increased
c) risk is reduced
d) the term of the position is increased
7) Because of the small cash outlay to buy an option, these securities are considered to be conservative investments.
Question 7 options:
a) True
b) False8) Which of the following is premised on lower stock prices?
Question 8 options:
a) buying a stock index call
b) buying a stock index put
c) buying a stock and selling a call
d) buying a stock and selling a put9) In addition to put and call options on individual stocks, there are also options on the market as a whole (i.e., an index).
Question 9 options:
a) True
b) False
10) A portfolio manager with a position in many stocks may hedge the portfolio by purchasing a stock index call option.
Question 10 options:
a) True
b) False
11) The Black/Scholes option valuation model divides the option’s strike price by the probability that the option will be
exercised.
Question 11 options:
a) True
b) False
12) An investor cannot buy and sell two different call options with the same expiration dates.
Question 12 options:
a) True
b) False
13) Writing both a put and a call at the same strike price and expiration date is an illustration of a straddle.Question 13 options:
a) True
b) False
14) If the hedge ratio is 0.7, the number of call options necessary to offset a long position in a stock is 7.0.
Question 14 options:
a) True
b) False
15) If investors believe that a stock’s prices will fluctuate but they are not certain as to the direction, these investors may buy
a straddle.
Question 15 options:
a) True
b) False
16) According to the Black/Scholes option valuation model, the value of a call option rises as interest rates increase.
Question 16 options:
a) True
b) False
17) The hedge ratio indicates the number of call options that is necessary to offset price movements in the underlying stock.
Question 17 options:
a) True
b) False18) To construct a bear spread, the investor buys a call option and shorts the stock.
Question 18 options:
a) True
b) False
19) Bull and Bear spreads require taking a long position in one option and a short position in another option with a different
strike price.
Question 19 options:
a) True
b) False
20) If the investor anticipates that the price of stock will be stable, he or she may
Question 20 options:a) sell a straddle
b) buy a straddle
c) buy a call
d) buy a putAct of Buying and Selling Assignment
RUBRIC
QUALITY OF RESPONSE NO RESPONSE POOR / UNSATISFACTORY SATISFACTORY GOOD EXCELLENT Content (worth a maximum of 50% of the total points) Zero points: Student failed to submit the final paper. 20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. 40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. 50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. Grammar (worth maximum of 20% of total points) Zero points: Student failed to submit the final paper. 5 points out of 20: The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors 10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors 15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. 20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. Structure of the Paper (worth 10% of total points) Zero points: Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper.
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