# Test Bank For Fundamentals of Futures And Options Markets 9th Edition By John C.Hull

**Hull: Fundamentals of Futures and Options Markets, Ninth Edition**

**Chapter 1: Introduction**

**Multiple Choice Test Bank**

- A one-year forward contract is an agreement where
- One side has the right to buy an asset for a certain price in one yearâ€™s time.
- One side has the obligation to buy an asset for a certain price in one yearâ€™s time.
- One side has the obligation to buy an asset for a certain price at some time during the next year.
- One side has the obligation to buy an asset for the market price in one yearâ€™s time.

**Answer: B**

- Which of the following is NOT true
- When a CBOE call option on IBM is exercised, IBM issues more stock
- An American option can be exercised at any time during its life
- An call option will always be exercised at maturity if the underlying asset price is greater than the strike price
- A put option will always be exercised at maturity if the strike price is greater than the underlying asset price.

**Answer: A**

- A one-year call option on a stock with a strike price of $30 costs $3; a one-year put option on the stock with a strike price of $30 costs $4. Suppose that a trader buys two call options and one put option. The breakeven stock price above which the trader makes a profit is
- $35
- $40
- $30
- $36

**Answer: A**

- A one-year call option on a stock with a strike price of $30 costs $3; a one-year put option on the stock with a strike price of $30 costs $4. Suppose that a trader buys two call options and one put option. The breakeven stock price below which the trader makes a profit is
- $25
- $28
- $26
- $20

**Â ****Answer: D**