1.

If convenience yield exceeds the carrying cost of a commodity, then the futures price is below the spot price. This situation is known as

		Spot-future parity
		Contango
		Convergence property
		Backwardation

2.

Discount factor is 0.985. Stock X is selling for $40 a share. A European option on this stock with a strike price of $38 is trading at $0.50 per share. If it is known that this option is priced above its intrinsic value, what type of option is it?

		A put
		A call

3.

When hedging a portfolio to make it delta-neutral, gamma-neutral, and vega-neutral, one needs to trade

		underlying stock
		underlying stock and two more options
		underlying stock and one more option

4.

S&P 500 Index is at 2780. A European June 21, 2020 SPX call option struck at 2500 is trading at $316.94. An identical European put option is trading at $5.15. A T-bill with 200 days to maturity is quoted at a yield of 2.46. According to put-call parity, which of the following strategies will earn you arbitrage profits?

		Buy the put and exercise it immediately
		Buy the call and exercise it immediately
		Write the call, buy the put, buy S&P 500, borrow at the risk-free rate
		Write the put, buy the call, short S&P 500, invest at the risk-free rate