1) If you believe the market is bearish and expect the settlement price will be 95, you will choose:

a. short forward

b. short call

c. long put

2) If you believe the market is bearish and expect the settlement price will be 90, you will choose:

a. short forward

b. short call

c. long put

3) If you believe the settlement price will have a 40% probability to be 130 and 60% probability to be 70, you will choose:

a. short forward

b. short call

c. long put

Consider the following derivatives product with the same underlying asset: Product Exercise Price Cost/Premium Time to maturity Forward 102 0 1 year Call 100 8.92 1 year Put 100 6.96 1 year The risk-free interest rate in the market is 2% p.a. effectively. The current underlying asset value is 100