Question

You purchase one IBM July 120 put contract for a premium of $3. You hold the option until the expiration date when IBM stock sells for $123 per share. You will realise a ______ on the investment.

A. $300 profit

B. $300 loss

C. $500 loss

D. $200 profit

You find that the confidence index is up, market breadth is up, and the TRIN ratio is up. In total, how many bullish signs do you have?

A. 0

B. 1

C. 2

D. 3

Which of the following is the most likely reaction of investors according to prospect theory?

A. When they gain €20,000, they feel more than twice as happy as when they gain €10,000.

B. When they lose €20,000, they feel as twice bad as when they lose €10,000.

C. When they lose €10,000, the magnitude of their disappointment is larger than the magnitude of their happiness from a €10,000 gain.

D. Investors tend to sell losing portfolios as quickly as possible.

Answer 1