1.Assume an option trader bought 10 August 15 puts on Citigroup, Inc. (C) for a total cost of$850. If the position was held to expiration at which point the stock closed at 16, calculate the dollar amount of profit or loss on the trade before commissions and taxes.

A. $1600

D. $0

B. $580

C. -$850

2.

One CBOT corn futures contract trades in units of 5,000 bushels and the minimum initial margin is $2,500 per contract. On July 17, 2013, the Sep '13 CBOT corn futures contract settled at $6.50 per bushel. Calculate the amount of leverage inherent in the futures contract using the minimum initial margin.

D. 15

B. 13

C.14

A. 12

3.

Holding all else equal, an unexpected fall in interest rates will cause the value of a given outstanding call option to __________.

B. remain constant

D. none of the above

A. increase

C. decrease