Series 3: Chapter 5 Practice Questions

Chapter 5 Practice Questions

1. 1. Which of the following is a synthetic long call?
2. A. Long futures position and long call position
3. B. Long futures position and long put position
4. C. Short futures position and long put position
5. D. Short futures position and long call position
6. 2. Which of the following could be combined with a shorted futures contract to create a synthetic short call investment?
7. A. Short call
8. B. Long call
9. C. Short put
10. D. Long put
11. 3. A synthetic long futures position consists of:
12. A. Any long call and short put for the same underlying contract
13. B. Any short call and long put for the same underlying contract
14. C. A long call and short put at the same strike and expiration for the same underlying contract
15. D. A short call and long put at the same strike and expiration for the same underlying contract
16. 4. A forward conversion combines which two of the following?
17. I. A long futures contract
18. II. A short futures contract
19. III. A short call and a long put on the futures contract
20. IV. A long call and a short put on the futures contract
21. A. I and III
22. B. I and IV
23. C. II and III
24. D. II and IV
25. 5. Suzie is long an April dry whey futures contract. If she then buys a put on the same contract, she has created which of the following?
26. A. A synthetic put
27. B. A synthetic call
28. C. A forward conversion
29. D. A synthetic short futures contract
30. 6. Which of the following best describes the difference between a futures conversion and a synthetic futures contract?
31. A. Conversions always include a put option, while a synthetic futures contract does not.
32. B. Conversions always include a call option, while a synthetic futures contract does not.
33. C. Conversions include multiple synthetic futures.
34. D. Conversions include an actual futu