17. The disadvantage of swaps is that they

A. lack liquidity.

B. are difficult to arrange for a counterparty.

C. suffer from default risk.

D. all of the above.

18. If you sell twenty-five $100,000 futures contracts to hedge holdings of a Treasury security, the value of the Treasury securities you are holding is

A. $250,000.

B. $1,000,000.

C. $2,500,000.

D. $5,000,000.

19. What is a call?

A. An option to sell stock at a specified price

B. An option to buy stock at a specified price

C. An option to sell stock on a specified date

D. An option to buy stock on a specified date

20. What is the value of a call on the expiration date, if on that date the price of the stock is $25 and the exercise price is $26?

A. $-1

B. $0

C. $1

D. $25