11 Review Later Which of the following options contracts does the profit/loss diagram below represent? Profit/Loss K Underlying Asset Spot Price Long put position Short call position Short put position Long call position 12 If the spot price is higher than the strike price for a put option, it is said to be: Review Later Out-of-the-money In-the-money At-the-money 13 Review Later An investor holds 200 shares of Company Z, with a current trading price of $26 per share. The investor believes that the stock price is likely to go down, therefore he purchased 200 put options on Company Z's shares. The put options have a strike price of $24 and a premium of $1.50. Determine the investor's profit or loss if the stock price falls to $20. -$500 -$900 -$700 -$300 14 Which of the following is NOT a common component of a swap contract? Review La Fixed / floating rates Strike price Notional amount Payment frequency 15 Company X and Company Y enter into an interest rate swap contract to swap fixed for floating interest rates for a notional amount of $500,000. The term of the interest rate swap is two years and the interest payments will be swapped every six months. The fixed rate on the swap is 4.75%, while the floating rates on the swap are as follows: 6-Month LIBOR Now 4.50% 6-months from now 4.70% 12-months from now 4.90% 18-months from now 5.10% What is the net payment that will be exchanged by the two counterparties in 18 months? $625 $125 -$375 -$875