3. A down-and-in option _______________. A. provides a payoff if the firm's stock price falls below some specified percentage of what it was at the beginning of the option term B. provides a payoff if the firm's stock price falls below some specified dollar amount during the term of the option C. expires worthless if the firm's stock price falls below some specified percentage of what it was at the beginning of the option term D. expires worthless if the firm's stock price falls below some specified dollar amount during the term of the option 4. A lookback option provides its holder with _______________. A. a payoff determined by either the maximum or minimum price of the underlying stock during the life of the option B. a payoff determined by the difference between the maximum and minimum price of the underlying stock during the life of the option C. a payoff if the firm's stock price falls below some specified dollar amount during the term of the option D. a payoff based on the average price of the underlying stock over the life of the option 5. Longer term American style options with maturities of up to three years are called __________. A. warrants B. LEAPS C. GICs D. CATs 6. The initial maturities of most exchange traded options are generally __________. A. less than a year B. less than 2 years C. between 1 and 2 years D. between 1 and 3 years 7. A futures call option provides its holder with the right to ___________. A. purchase a particular stock at some time in the future at a specified price B. purchase a futures contract for the delivery of options on a particular stock C. purchase a futures contract at a specified price for a specified period of time D. deliver a futures contract and receive a specified price at a specific date in the future 8. The writer of a put option _______________. A. agrees to sell shares at a set price if the option holder desires B. agrees to buy shares at a set price if the option holder desires C. has the right to buy shares at a set price D. has the right to sell shares at a set price 9. Advantages of exchange traded options over OTC options include all but which one of the following? A. Ease and low cost of trading B. Anonymity of participants C. Contracts that are tailored to meet the needs of market participants D. No concerns about counterparty credit risk 10. Each listed stock option contract gives the holder the right to buy or sell __________ shares of stock. A. 1 B. 10 C. 100 D. 1,000 11. Exercise prices for listed stock options usually occur in increments of ____, and bracket the current stock price. A. $1 B. $5 C. $20 D. $25 12. You buy a call option and a put option on General Electric. Both the call option and the put option have the same exercise price and expiration date. This strategy is called a _________. A. time spread B. long straddle C. short straddle D. money spread