1. If the underlying stock price decreases, the value of existing call options should ______, and the value of existing put options should ______.

A. decrease; decrease B. decrease; increase C. not change; not change D. increase; decrease E. increase; increase

2. What option contract should you buy if you want to be able to buy the underlying stock prior to the option expiration date?

• A. European put option
• B. European call option
• C. American put option
• D. American call option
• E. Either (B) or (D) would work.

3.A call option buyer benefits from the underlying stock price ________ while a put option writer benefits from the underlying stock price _________.

• A. decreasing; decreasing
• B. decreasing; increasing
• C. increasing; decreasing
• D. increasing; increasing