2a. Assume that the current stock price is 120, the price next period will either by 130 or 100., the interest rate is 5%, and the stock pays no dividends. Consider an American and European call that expire in one period and have an exercise price of 100. Group of answer choices The American call should be exercised immediately The value of the European call is grater than 20.

2b. The Current Value Of S&P 500 Is 4,000. Future Value Of S&P 500 Including Dividends Will Either Be 4,800 or 3,600. The S&P Index Will Pay $40 Of Dividends. The Interest Rate is 5%. Borrowing Present Value Of $3,500. Invest $4,000 In An Index Fund Shorts 0.5 S&P Futures Contracts That Settle At 1 Times the Index Value. This position is equivalent to Group of answer choices Investing 4,000 in an index fund and borrowing 3,000 Investing 2,000 in an index fund A zero investment in an index fund and 2,000 invested in a money market fund None of these choices

2c. Investors can create money market returns by combining a position in an S&P index fund with a futures contract. Group of answer choices True False

2d. Writing in the money puts and investing the present value of the puts exercise price in a money market fund, generates premium income and gives up some of the upside in the stock. It is an alternative to writing full covered calls. Group of answer choices True False

2e. A futures price of the S&P 500 mini contract that is less than the current level of the S&P 500 index indicates that the index is overpriced. Group of answer choices True False