1.Which of the following statements regarding US Treasury futures is FALSE?

They use a conversion factor to determine the price of the delivered bond as a ratio compared to a 6% coupon bond both evaluated at a 6% yield.

A bond that is cheapest to deliver bond can "trade special" in the repo markets.

They are cash settle.

They are often used to hedge portfolio duration.

2.

2.Which statement about options contracts is TRUE?

An investor with a short option position is obligated to purchase the underlying at the strike price.

A call option premium is higher if the strike price is higher.

European style option contracts can only be exercised on one specific date.

An investor can only write a call option if he or she owns the underlying stock.