Which of the following was true after 2005? ( )
A. The options never had any affect on a company’s financial statements
B. The value of options which were at-the-money when issued had to be expensed on the income statement
C. The value of options which were at-the-money when issued had to be reported in the notes to the financial statements
D. Options which were at-the-money when issued did not affect a company’s financial statements
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Which of the following is true about employee stock options after they have been issued? ( )
A. They have to be revalued every year
B. They have to be revalued every quarter
C. They have to be revalued every day like other derivatives
D. They never have to be revalued
Which of the following is true about a long forward contract( )
A. The contract becomes more valuable as the price of the asset declines
B. The contract becomes more valuable as the price of the asset rises
C. The contract is worth zero if the price of the asset declines after the contract has been entered into
D. The contract is worth zero if the price of the asset rises after the contract has been entered into
An investor sells a futures contract an asset when the futures price is $1,500. Each contract is on 100 units of the asset. The contract is closed out when the futures price is $1,540. Which of the following is true( )
A. The investor has made a gain of $4,000
B. The investor has made a loss of $4,000
C. The investor has made a gain of $2,000
D. The investor has made a loss of $2,000
Which of the following describes European options? ( )
A. Sold in Europe
B. Priced in Euros
C. Exercisable only at maturity
D. Calls (there are no European puts)