Equity Investments - Equity Investments Section 1
16. Which of the following is least likely an objective of market regulation?
- Option : C
- Explanation : Ensuring that investors earn at least the risk free rate is least likely to be an objective of market regulation
- Option : B
- Explanation : Equity / Market Value = Maintenance Margin {6000 + [P x 250 – (35 x 250)]}/ P x 250 = 35% P = $16.92.
- Option : C
- Explanation : Since Mr. Ahmed has written a put contract, he is short the option and has an obligation to purchase the asset if exercised by the put owner. He also has a long exposure to the risk of the underlying index future because he benefits when its quoted price increases—that is, when the put declines in value (or suffers a loss when its quoted price decreases as the put increases in value).
- Option : A
- Explanation : Option contracts are executed at the strike price and can therefore be viewed as limit orders. In this case, a put buy order at a strike price of $40 will guarantee selling the stock at $40.
Which analyst’s statement is most likely correct?
- Option : B
- Explanation : A security market index represents the security market, market segment or asset class.
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