FRM 2026 Part I Financial Markets and Products Options Free Quiz 1

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FRM 2026 Part I Financial Markets and Products Options Free Quiz 1

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FRM 2026 Part I Financial Markets and Products Options Free Quiz 1

Practice FRM 2026 Part I Financial Markets and Products MCQs from Options. Get instant results with Explanation.

General10 MCQs

1. What is an option?

A. An option gives the holder the obligation to buy or sell the assetB. An option gives the holder the right, but not the obligation, to buy or sellC. An option is the same as a forward contractD. An option has no cost to the buyer

2. What is the difference between a call and a put option?

A. A call option gives the right to sellB. A put option gives the right to buyC. A call option gives the right to buy; a put option gives the right to sellD. Call and put options are the same

3. What are the payoff formulas for long call and put options?

A. Long call payoff = max(0, ST - K); Long put payoff = max(0, K - ST)B. Long call payoff = max(0, K - ST); Long put payoff = max(0, ST - K)C. Long call payoff = ST - K; Long put payoff = K - STD. The payoff is linear for options

4. How is the profit of an option calculated?

A. Profit = Payoff - Premium for the sellerB. Profit = Payoff + Premium for the buyerC. Profit = Premium - Payoff for the buyerD. Profit = Payoff - Premium for the buyer; Profit = Premium - Payoff for the seller

5. What is the difference between European and American options?

A. European options can be exercised anytimeB. European options can only be exercised at expiration; American options can be exercised anytimeC. American options can only be exercised at expirationD. There is no difference between European and American options

General10 MCQs

6. What are the strike price and premium in options?

A. The strike price is the price paid for the optionB. The premium is the price at which the option can be exercisedC. The strike price is the exercise price; the premium is the price paid for the optionD. The strike price and premium are the same

7. What does it mean for an option to be in-the-money?

A. A call is in-the-money if ST > K; a put is in-the-money if ST < KB. A call is in-the-money if ST < K; a put is in-the-money if ST > KC. An option is in-the-money if the premium is paidD. In-the-money options have no value

8. What is the difference between intrinsic value and time value?

A. Intrinsic value = premium - time valueB. Time value = intrinsic value + premiumC. Intrinsic value is the same as the premiumD. Intrinsic value is the in-the-money amount; time value is the premium minus intrinsic value

9. What is the Black-Scholes model used for?

A. The Black-Scholes model is used for American optionsB. The Black-Scholes model is used for pricing European optionsC. The Black-Scholes model assumes normal distribution for asset returnsD. The Black-Scholes model does not consider volatility

10. What is the Black-Scholes formula for a European call option?

A. C = S0 × N(d1) + K × e^(-rT) × N(d2)B. C = S0 × N(d2) - K × e^(-rT) × N(d1)C. C = S0 × N(d1) - K × e^(-rT) × N(d2)D. C = S0 × N(d1) - K × N(d2)

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FRM

Conducting Body: Global Association of Risk Professionals GARP

Frequency: three times a year: May, August, and November | Time: 240 Minutes

Negative Marking: No

⚡ Test Pattern (Total: 100 MCQs):

Foundations of Risk Management: 25 MCQs
Quantitative Analysis: 25 MCQs
Financial Markets and Products: 25 MCQs
Valuation and Risk Models: 25 MCQs

Merit Formula: -

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