1. assuming both are priced fairly when is buying a call option less risky than buying the underlying stock?

a. Call option is at the money

b. The option is deeply out of the money

c. The market is less volatile the normal

d. Never :buying an option is always riskier than buying a stock

2. The price of an American put option that is fairly price will be closest to its intrinsic value

a. When it is for those from its expiration date

b. When it is deeply in the money

c. When it is deeply out of the money

d. When it is about to expire

3. Pretend that you used futures to head to your entire portfolio against a decline in market prices. After the market value see that you still lost money the most likely explanation is

a. You were short futures rather than long future

b. Your estimate of the portfolio beta was incorrect

c. The futures were mispriced

d. The decline in the market was greater than you anticipated