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Question 1

1. If you are the writer of a call option

   	a.	You believe that the price of the underlying asset will decrease
   	b.	Collect a premium from the call holder
   	c.	Are obligated to buy the underlying asset for the strike price if the holder exercies the option
   	d.	Have a maximum payoff equal to the strike price
   	e.	All of the above

Question 2

1. If the price of the underlying asset is S=$52, the strike price is X=$45, and C=$7, the price of a put option is_____? Note: The option is at expiration so that time value of money is irrelevant.

   	a.	$7
   	b.	$5
   	c.	$0
   	d.	-$7
   	e.	$45

Question 3

1. Which of the following statements is/are true.

   I. Options never have negative intrinsic value

   II. A put option is technically a short position

   III. A call option has unlimited upside potential

   	a.	I only
   	b.	I and III
   	c.	II and III
   	d.	I, II, and III
   	e.	III only

Question 4

1. S = $76, C= $5, and X = $75

   	a.	The call option is in the money
   	b.	The call option should be exercised
   	c.	The payoff if exercised is -$4
   	d.	The payoff if left to expire without exercising is -$5
   	e.	All of the above

Question 5

1. Buying the underlying asset plus a put option

   I. Has a payoff schedule resembling a call option

   II. Has a minimum payoff equal to the value of the put option

   III. Has unlimited upside potential

   	a.	I, II, and III
   	b.	I and II
   	c.	II only
   	d.	III only
   	e.	II and III

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