1. Assume Call and Put options on IBM Stock have a strike of $50 have premia of $2.50 and $2.00 respectively. If at maturity the spot is $52.00, which option gets exercised (if any) and which is true:

. Neither; Profit is $0

B. Put; Loss $.50

C.Call; Profit $2.50

D. Call; Loss $.50

E. Put; Profit is $.50

F.None of the other answers

2. Zombie S&Ls (S&Ls that were already insolvent by 1982) _________

paid above market interest rates to attract deposits to fuel their lending boom.

offered loans at below market interest rates to expand their lending.

drove down the profitability of solvent S&Ls, threatening to turn them into zombies too.

regularly rebalanced their mortgage portfolios prior to the crisis.

did at least two of the answers listed

3. When an investment bank underwrites a bond issue, it usually:

retains the bonds for future appreciation

has pre-sold most of the issue to capital market participants

earns its profits only through brokerage fees

has pre-sold most of the issue through its own brokerage

none of these answers.