Using the parameters shown calculate the capital you would need to allocate to the trade:
Trading capital = $100,000
Risk size = 2%
Share price = $7.50
Stop-loss = $6.70
Which of the following parameters is not known when using an options pricing model to calculate “fair value”?
1 The current price of the security
2 The strike price of the option
3 Current interest rates
4 The number of days until the option expires
5 The implied volatility
A standard deviation of 3 will capture what percentage of data?
Which of the following statements is generally true:
1 A growth stock has a higher P/E ratio and a lower dividend yield than a value stock
2 A growth stock has a higher P/E ratio and a higher dividend yield than a value stock
3 A growth stock has a lower P/E ratio and a higher dividend yield than a value stock
4 A growth stock has a lower P/E ratio and a lower dividend yield than a value stock
If a share was trading at $40, place the following put options in order of the most
expensive to the most cheapest:
1 June $40 put
2 June $45 put
3 June $39 put
If you had $50,000 trading capital and $40,000 in a cash reserve and you were using the total equity model with a 2% risk size, what would the risk premium be?
Is an increase in volume more important to confirm an uptrend or a downtrend?
Contact Mike Lally by e-mail at firstname.lastname@example.org
for the correct answers