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Question 1 of 10
1. Question
Which of the following describe out-of-the-money amounts in Stock Options in Interest Rate Options?
I. Any excess of the aggregate exercise price of the option over the product of the current interest rate measure value and the applicable multiplier.
II. Any excess of the product of the current interest rate measure value and the applicable multiplier over the aggregate exercise price of the option.
III. Any excess of the aggregate exercise price of the option or warrant over the product of units per foreign currency contract and the closing spot prices.
IV. The product of units per foreign currency contract and the closing spot prices over the aggregate price of the option or warrant.Correct
According to FINRA rule 4210 the following describe out-of-the-money amounts in Stock Options in Interest Rate Options:
(a) Any excess of the aggregate exercise price of the option over the product of the current interest rate measure value and the applicable multiplier.
(b) Any excess of the product of the current interest rate measure value and the applicable multiplier over the aggregate exercise price of the option.Incorrect
According to FINRA rule 4210 the following describe out-of-the-money amounts in Stock Options in Interest Rate Options:
(a) Any excess of the aggregate exercise price of the option over the product of the current interest rate measure value and the applicable multiplier.
(b) Any excess of the product of the current interest rate measure value and the applicable multiplier over the aggregate exercise price of the option. -
Question 2 of 10
2. Question
What is nominal principal amount mean as used with reference to a GNMA option?
Correct
According to FINRA rule 4210, is nominal principal amount mean as used with reference to a GNMA option is the remaining unpaid principal balance of GNMAs required to be delivered to the holder of a call or by the holder of a put upon exercise of an option without regard to any variance in the remaining unpaid principal balance permitted to be delivered upon such exercise and shall be $100,000 in the case of a single call or put. While exercise price means in respect of an option or warrant contract is the stated price per unit at which the underlying security may be purchased (in the case of a call) or sold (in the case of a put) upon the exercise of such option contract, European-style option mean is an option contract that can be exercised only at its expiration pursuant to the rules of The Options Clearing Corporation the term “expiration date” in respect of an option contract means the date and time fixed by the rules of the Options Clearing Corporation for the expiration of all option contracts covering the same underlying security or underlying index stock group and having the same expiration month as such option contract.
Incorrect
According to FINRA rule 4210, is nominal principal amount mean as used with reference to a GNMA option is the remaining unpaid principal balance of GNMAs required to be delivered to the holder of a call or by the holder of a put upon exercise of an option without regard to any variance in the remaining unpaid principal balance permitted to be delivered upon such exercise and shall be $100,000 in the case of a single call or put. While exercise price means in respect of an option or warrant contract is the stated price per unit at which the underlying security may be purchased (in the case of a call) or sold (in the case of a put) upon the exercise of such option contract, European-style option mean is an option contract that can be exercised only at its expiration pursuant to the rules of The Options Clearing Corporation the term “expiration date” in respect of an option contract means the date and time fixed by the rules of the Options Clearing Corporation for the expiration of all option contracts covering the same underlying security or underlying index stock group and having the same expiration month as such option contract.
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Question 3 of 10
3. Question
Which of the following requirements is deducted in computing the net capital of the member under SEA Rule 15c3-1?
I. On any one account or group of commonly controlled accounts to the extent such deficiency exceeds 5 percent of a member’s tentative net capital (as such term is defined in SEA Rule 15c3-1)
II. On all accounts combined to the extent such deficiency exceeds 25 percent of a member’s tentative net capital
III. 100 percent of such excess amount, reduced by any amount already deducted pursuant
IV. 50 percent of such excess amount, reduced by any amount already deducted pursuantCorrect
According to FINRA rule 4210 the following requirements is deducted in computing the net capital of the member under SEA Rule 15c3-1:
(a) On any one account or group of commonly controlled accounts to the extent such deficiency exceeds 5 percent of a member’s tentative net capital (as such term is defined in SEA Rule 15c3-1)
(b) On all accounts combined to the extent such deficiency exceeds 25 percent of a member’s tentative net capital
(c) 100 percent of such excess amount, reduced by any amount already deducted pursuant
(d) 50 percent of such excess amount, reduced by any amount already deducted pursuantIncorrect
According to FINRA rule 4210 the following requirements is deducted in computing the net capital of the member under SEA Rule 15c3-1:
(a) On any one account or group of commonly controlled accounts to the extent such deficiency exceeds 5 percent of a member’s tentative net capital (as such term is defined in SEA Rule 15c3-1)
(b) On all accounts combined to the extent such deficiency exceeds 25 percent of a member’s tentative net capital
(c) 100 percent of such excess amount, reduced by any amount already deducted pursuant
(d) 50 percent of such excess amount, reduced by any amount already deducted pursuant -
Question 4 of 10
4. Question
Which of the following requirements to set a related long position in the underlying component shall be valued at no more than the call/warrant exercise price for margin equity purposes?
I. a component underlying an option or warrant is carried “long” (“short”) in an account in which there is also carried a “long” put (call)
II. Warrant specifying equivalent units of the underlying component
III. The minimum amount of margin that must be maintained on the underlying component is 10 percent of the aggregate option/warrant exercise price plus the “out-of-the-money” amount
IV. Not to exceed the minimum maintenance required pursuantCorrect
According to FINRA rule 4210, the following are requirements to set a related long position in the underlying component shall be valued at no more than the call/warrant exercise price for margin equity purposes?
(a) A component underlying an option or warrant is carried “long” (“short”) in an account in which there is also carried a “long” put (call)
(b) Warrant specifying equivalent units of the underlying component
(c) The minimum amount of margin that must be maintained on the underlying component is 10 percent of the aggregate option/warrant exercise price plus the “out-of-the-money” amount
(d) Not to exceed the minimum maintenance required pursuantIncorrect
According to FINRA rule 4210, the following are requirements to set a related long position in the underlying component shall be valued at no more than the call/warrant exercise price for margin equity purposes?
(a) A component underlying an option or warrant is carried “long” (“short”) in an account in which there is also carried a “long” put (call)
(b) Warrant specifying equivalent units of the underlying component
(c) The minimum amount of margin that must be maintained on the underlying component is 10 percent of the aggregate option/warrant exercise price plus the “out-of-the-money” amount
(d) Not to exceed the minimum maintenance required pursuant -
Question 5 of 10
5. Question
What is class (of options) mean?
Correct
According to FINRA rule 4210, class (of options) mean is all option contracts of the same type and kind covering the same underlying security or underlying stock group. While the term “expiration month” in respect of an option contract means the month and year in which such option contract expire, the term “counterparty” means any person that enters into a Covered Agency Transaction with a member and the term “margin” means the amount of equity to be maintained on a security position held or carried in an account.
Incorrect
According to FINRA rule 4210, class (of options) mean is all option contracts of the same type and kind covering the same underlying security or underlying stock group. While the term “expiration month” in respect of an option contract means the month and year in which such option contract expire, the term “counterparty” means any person that enters into a Covered Agency Transaction with a member and the term “margin” means the amount of equity to be maintained on a security position held or carried in an account.
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Question 6 of 10
6. Question
Which of the following requirement for the call into the security underlying the option, no margin?
I. Net “long” position is adequately margined in accordance with this Rule
II. The right to exchange or convert the net “long” position does not expire on or before the date of expiration of the “short” call. Where a listed or OTC put is carried “short” against an existing net “short” position in the security underlying the option
III. No margin need be required on the put, provided such net “short” position is adequately margined in accordance with this Rule
IV. Shall be 10 percent of the aggregate exercise price plus the amount by which the exercise price of the put exceeds the current market value of the underlyingCorrect
According to FINRA rule 4210, the following are the requirement for the call into the security underlying the option, no margin?
(a) Net “long” position is adequately margined in accordance with this Rule
(b) The right to exchange or convert the net “long” position does not expire on or before the date of expiration of the “short” call. Where a listed or OTC put is carried “short” against an existing net “short” position in the security underlying the option
(c) No margin need be required on the put, provided such net “short” position is adequately margined in accordance with this RuleIncorrect
According to FINRA rule 4210, the following are the requirement for the call into the security underlying the option, no margin?
(a) Net “long” position is adequately margined in accordance with this Rule
(b) The right to exchange or convert the net “long” position does not expire on or before the date of expiration of the “short” call. Where a listed or OTC put is carried “short” against an existing net “short” position in the security underlying the option
(c) No margin need be required on the put, provided such net “short” position is adequately margined in accordance with this Rule -
Question 7 of 10
7. Question
What is current cash market price as used with reference to GNMAs mean?
Correct
According to FINRA rule 4210 current cash market price as used with reference to GNMAs is the prevailing price in the cash market for GNMAs bearing a particular stated rate of interest to be delivered on the next applicable monthly settlement date determined in the manner specified in the rules of The Options Clearing Corporation. While the term “annualized discount” as used with reference to a Treasury bill means the percent discount from principal amount at which the Treasury bill may be purchased or sold, expressed as a discount for a term to maturity of 360 days, the term “appropriate differential” is the difference between the current cash market price of GNMAs bearing the same stated rate of interest as that borne by the GNMA delivered upon exercise and the exercise price and the term “American-style option” means an option contract that can be exercised at any time prior to its expiration pursuant to the rules of The Options Clearing Corporation.
Incorrect
According to FINRA rule 4210 current cash market price as used with reference to GNMAs is the prevailing price in the cash market for GNMAs bearing a particular stated rate of interest to be delivered on the next applicable monthly settlement date determined in the manner specified in the rules of The Options Clearing Corporation. While the term “annualized discount” as used with reference to a Treasury bill means the percent discount from principal amount at which the Treasury bill may be purchased or sold, expressed as a discount for a term to maturity of 360 days, the term “appropriate differential” is the difference between the current cash market price of GNMAs bearing the same stated rate of interest as that borne by the GNMA delivered upon exercise and the exercise price and the term “American-style option” means an option contract that can be exercised at any time prior to its expiration pursuant to the rules of The Options Clearing Corporation.
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Question 8 of 10
8. Question
Which of the following describes Collars?
I. Carried with a “long” put or warrant specifying equivalent units of the same underlying component and having a lower exercise price and the same expiration date as the “short” call/warrant
II. The minimum amount of margin that must be maintained for the underlying component shall be the lesser of 10 percent of the aggregate exercise price of the put plus the put “out-of-the-money” amount or 25 percent of the call aggregate exercise price
III. The minimum amount of margin that must be maintained for the underlying component
IV. Shall be 10 percent of the aggregate exercise price plus the amount by which the exercise price of the put exceeds the current market value of the underlyingCorrect
According to FINRA rule 4210, the following describes Collars:
(a) Carried with a “long” put or warrant specifying equivalent units of the same underlying component and having a lower exercise price and the same expiration date as the “short” call/warrant
(b) The minimum amount of margin that must be maintained for the underlying component shall be the lesser of 10 percent of the aggregate exercise price of the put plus the put “out-of-the-money” amount or 25 percent of the call aggregate exercise priceIncorrect
According to FINRA rule 4210, the following describes Collars:
(a) Carried with a “long” put or warrant specifying equivalent units of the same underlying component and having a lower exercise price and the same expiration date as the “short” call/warrant
(b) The minimum amount of margin that must be maintained for the underlying component shall be the lesser of 10 percent of the aggregate exercise price of the put plus the put “out-of-the-money” amount or 25 percent of the call aggregate exercise price -
Question 9 of 10
9. Question
Which of the following describes “Long” Box Spread in European-Style Options?
I. Margin must be deposited and maintained equal to at least 50 percent of the aggregate difference in the exercise prices
II. The net proceeds from the sale of “short” option components may be applied to the requirement
III. Margin purposes, the “long” box spread may be valued at an amount not to exceed 100 percent of the aggregate difference in the exercise prices
IV. The minimum amount of margin that must be maintained for the underlying component shall be the lesser of 10 percent of the aggregate exercise price of the put plus the put “out-of-the-money” amount or 25 percent of the call aggregate exercise priceCorrect
According to FINRA rule 4210, the following describes “Long” Box Spread in European-Style Options:
(a) Margin must be deposited and maintained equal to at least 50 percent of the aggregate difference in the exercise prices
(b) The net proceeds from the sale of “short” option components may be applied to the requirement
(c) Margin purposes, the “long” box spread may be valued at an amount not to exceed 100 percent of the aggregate difference in the exercise pricesIncorrect
According to FINRA rule 4210, the following describes “Long” Box Spread in European-Style Options:
(a) Margin must be deposited and maintained equal to at least 50 percent of the aggregate difference in the exercise prices
(b) The net proceeds from the sale of “short” option components may be applied to the requirement
(c) Margin purposes, the “long” box spread may be valued at an amount not to exceed 100 percent of the aggregate difference in the exercise prices -
Question 10 of 10
10. Question
What is exercise price mean in respect of an option or warrant contract?
Correct
According to FINRA rule 4210 exercise price mean in respect of an option or warrant contract is the stated price per unit at which the underlying security may be purchased (in the case of a call) or sold (in the case of a put) upon the exercise of such option contract. While European-style option means is an option contract that can be exercised only at its expiration pursuant to the rules of The Options Clearing Corporation, the term “exercise settlement amount” shall mean the difference between the “aggregate exercise price” and the “aggregate current index value” (as such terms are defined in the pertinent By-Laws of The Options Clearing Corporation) and the term “expiration date” in respect of an option contract means the date and time fixed by the rules of the Options Clearing Corporation for the expiration of all option contracts covering the same underlying security or underlying index stock group and having the same expiration month as such option contract.
Incorrect
According to FINRA rule 4210 exercise price mean in respect of an option or warrant contract is the stated price per unit at which the underlying security may be purchased (in the case of a call) or sold (in the case of a put) upon the exercise of such option contract. While European-style option means is an option contract that can be exercised only at its expiration pursuant to the rules of The Options Clearing Corporation, the term “exercise settlement amount” shall mean the difference between the “aggregate exercise price” and the “aggregate current index value” (as such terms are defined in the pertinent By-Laws of The Options Clearing Corporation) and the term “expiration date” in respect of an option contract means the date and time fixed by the rules of the Options Clearing Corporation for the expiration of all option contracts covering the same underlying security or underlying index stock group and having the same expiration month as such option contract.