Prior to expiration, the maximum value of an Americana call option and an American put option, respectively, is closest to the: American put option American call option ①A. Exercise price Exercise price ②B. Exercise price Underlying price ③C. Underlying price Exercise price
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Option investor D sells (writes, takes a SHORT position in) one of the following call options: Type of option: call option Underlying asset: 100 shares of Disney stock Exercise price: $40 per share Premium : $2.25 per share Expiration date : January The current market price of Disney stock is $39.02 per share. Investor D already owns 500 shares of Disney stock. Which of the following describes the amount of initial margin required for this transaction
A. Since the call option is "in the money" investor D is not required to deposit initial margin.
B. Since investor D owns at least 100 shares of Disney stock, he must deposit initial margin in the amount of 100% of the option premium.
C. Since investor D owns at least 100 shares of Disney stock, no additional margin is required.
Which of the following statements is NOT an advantage of swaps Swaps:
A. give the traders privacy.
B. have little or no regulation.
C. minimize default risk.
Financial derivatives also provide a powerful tool for limiting risks that individuals and firms face in the ordinary conduct of their business. This is an example of:
A. trading efficiency.
B. speculation.
C. risk management.
The price of a stock is $44 per share, and the October put with an exercise price of $45 is selling for $3. The intrinsic value of the option is :
A. $1.00.
B. $2.00.
C. $3.00.