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GARP 2016-FRR Exam - Topic 1 Question 10 Discussion

An options trader for a large institutional investor takes a long equity option position. Which of the following risks need to be considered when taking this position?I . All the risks of underlying equitiesII . Perceived volatility changesIII . Future dividends yieldsIV . Risk-free interest rates
D) I, II, III, IV
A) I, II
B) II, III
C) III, IV

GARP 2016-FRR Exam - Topic 1 Question 10 Discussion

Actual exam question for GARP's 2016-FRR exam
Question #: 10
Topic #: 1
[All 2016-FRR Questions]

An options trader for a large institutional investor takes a long equity option position. Which of the following risks need to be considered when taking this position?

I . All the risks of underlying equities

II . Perceived volatility changes

III . Future dividends yields

IV . Risk-free interest rates

Show Suggested Answer Hide Answer
Suggested Answer: D

by Truman at Aug 04, 2025, 04:26 PM

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Wayne
7 months ago
Seems like a lot to keep track of, not sure about the interest rates part.
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Merri
7 months ago
Wait, are future dividend yields really that important?
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Curtis
7 months ago
Definitely need to consider all the risks of underlying equities.
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Lamar
7 months ago
I think all four factors matter for a comprehensive view.
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Felice
7 months ago
I agree, perceived volatility changes are crucial too!
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Derick
8 months ago
I feel like all four risks could be relevant, but I’m not entirely sure if risk-free interest rates play a big role in a long equity option position.
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Na
8 months ago
I think perceived volatility changes are important too, especially since we practiced a question that highlighted that in class.
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Izetta
8 months ago
I'm a bit unsure about the impact of future dividend yields on my option position. Do they really affect the pricing significantly?
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Marcelle
8 months ago
I remember we discussed how underlying equity risks are crucial when holding options, so I think I should definitely consider that.
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Marci
9 months ago
This is a good test of our options knowledge. I'll methodically go through each risk factor and think about how it impacts the long equity option position. Shouldn't be too tricky.
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Tabetha
9 months ago
I'm a little confused by all the different risk factors listed. I'll need to review my notes on options pricing to make sure I understand which ones are most relevant here.
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Gwen
9 months ago
Okay, I've got this. The key risks are the underlying equity risks, volatility changes, dividends, and interest rates. I'll select the answer that covers all those bases.
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Keneth
9 months ago
Hmm, I'm a bit unsure about this one. I know options have a lot of moving parts, so I'll need to carefully consider all the factors mentioned.
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Talia
9 months ago
This seems like a straightforward options question. I'll need to think through the key risks involved in a long equity option position.
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Mila
10 months ago
Future dividends yields and risk-free interest rates are also crucial.
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Eve
10 months ago
I, II, III, and IV? Sounds like a lot to keep track of. Maybe I should just stick to trading pogs instead.
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Sina
10 months ago
I agree, but we also need to consider perceived volatility changes.
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Kimbery
10 months ago
I think the risks of underlying equities are important.
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Earleen
11 months ago
Hmm, I'm torn between B and D. Gotta love those future dividend yields, but the risk-free rates can't be ignored either. Decisions, decisions.
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German
11 months ago
II and III for sure. Volatility and dividends are key factors to consider. Who cares about the underlying equities, am I right?
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Sharen
10 months ago
User 3: I agree, those factors can really affect the outcome of the trade.
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Rosio
10 months ago
User 2: Definitely, volatility and dividends can have a big impact on the option position.
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Lenora
10 months ago
User 1: I think II and III are the most important risks to consider.
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Jean
11 months ago
Definitely going with D. Can't forget about the risk-free interest rates! That's like the bread and butter of options trading.
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Mireya
11 months ago
I agree, D covers all the bases when it comes to risks in options trading.
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