1. Which one of the following statements correctly describes your situation as the owner of an American call option?

A. You are obligated to buy at a set price at any time up to and including the expiration date.

B. You have the right to sell at a set price at any time up to and including the expiration date.

C. You have the right to buy at a set price only on the expiration date.

D. You are obligated to sell at a set price if the option is exercised.

E. You have the right to buy at a set price at any time up to and including the expiration date.

2. You own stock in a firm that has a pure discount loan due in six months. The loan has a face value of $50,000. The assets of the firm are currently worth $62,000. The stockholders in this firm basically own a _____ option on the assets of the firm with a strike price of:

A. put; $62,000. B. call; $50,000. C. warrant; $62,000. D. call; $62,000. E. put; $50,000.