Easy Quantitative Finance Practice Questions

152 free easy-difficulty Quantitative Finance questions, drawn live from KomFi's calibrated bank. Build the foundation first: these test the core mechanics every harder question assumes.

1. If the underlying stock price S moves by +$2.00 over a very short interval, what is the estimated second-order
2. When pricing a 'Digital' (or Binary) call option near expiry with the spot price very close to the strike, why
3. In the context of the Black-Scholes PDE, the Greek 'Theta' (Theta) measures the sensitivity of the option pric
4. Based on put-call parity, what is the arbitrage-free relationship?
5. If the risk-free growth factor over the period is 1.02, what is the risk-neutral probability p^* of an up move
6. Assuming the same market conditions, which statement is generally true?
7. If the risk-neutral probability p = 0.5539 and the discount factor per step is e^-0.025, what is the value of
8. In the Black-Scholes-Merton PDE, which parameter's absence confirms the principle of risk-neutral valuation?
9. A lookback call option with a floating strike allows the hol… — Why is this exotic option significantly more e
10. In the Black-Scholes PDE, the 'Theta-Gamma tradeoff' for a delta-neutral portfolio implies that a long-gamma t
11. A desk is pricing a 'down-and-out' barrier call option. If the barrier is not breached, the option behaves lik
12. An arithmetic-average Asian call is struck at 100 on a stock… — What is the terminal payoff of this option?
13. A European call and put on a non-dividend stock have the same strike K =100 and expiry T = 1. The risk-free ra
14. If the continuously compounded risk-free rate is r = 5%, what is the fair no-arbitrage forward price?
15. Why is an arithmetic Asian option generally cheaper than a standard European vanilla option on the same underl
16. What is the break-even stock price at expiry?
17. A 1-year European call option on a stock at S_0 = 100 has a strike K = 100. If r = 0 and σ = 20%, calculate d_
18. If the underlying moves by Δ S = +$2, what is the estimated profit from the Gamma component alone?
19. What is the break-even stock price at expiry?
20. Using the principle of in-out parity, what is the fair value of the corresponding down-and-in (D&I) call?
21. Using the 'in-out parity' for barrier options, if a vanilla European call is worth 7.20 and the corresponding
22. A 'lookback' option is described as having 'hindsight' because:
23. In equity markets, the 'volatility skew' typically shows that implied volatility is highest for which types of
24. The 'volatility smile' or 'skew' is an empirical observation that invalidates which BSM assumption?
25. What is the relationship between 'Volatility' and 'Variance' in terms of scaling over time?
26. Which characteristic defines a 'knock-out' barrier option?
27. Which type of volatility is defined as the annualized standard deviation of past log-returns of an asset?
28. If you are 'long Gamma' and 'short Theta', you are essentially betting that the underlying asset will move:
29. In a Merton structural model, the equity of a firm is viewed… — What is the appropriate 'strike price' in this
30. What is the call’s payoff per share?

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