1.

Which of the following statements is false?

Question 1 options:

	The risk premium for a stock is affected by its idiosyncratic risk.
	Firm-specific news is good or bad news about the company itself.
	Firms are affected by both systematic and firm-specific risk.
	When firms carry both types of risk, only the firm-specific risk will be diversified when we combine many firms' stocks into a portfolio.

2.

Which of the following statements about derivative contracts is false?

Question 2 options:

	The rights and obligations of contracting parties are defined in a derivative contract.
	The buyer in a derivative takes on a long position while the seller in a derivative takes on a short position.
	The price for immediate purchase of an underlying asset is called the forward price.

3.

Which of the following describes a short position in an option?

Question 3 options:

	A position where an option has been sold
	A position in an option lasting less than one month
	A position in an option lasting less than three months
	A position in an option lasting less than six months

4.

A put option on a stock has an exercise price of $25, the stock is trading at $22, and the price of the put option is $3.50. The option is:

Question 4 options:

	$22 out of the money
	$0.50 out-of-the-money.
	$3 in-the-money.
	$6.50 out-of-the-money.