FIN $405$

Please help me to just choose the correct answer choice $..$ Thank you

$1.$A call option priced at $$2$ with a stock price of $$30$ and an exercise price of $$35$ allows the holder to buy the stock at

a$.$$$32$

b$.$$$2$

c$.$$$35$

d$.$$$33$

$2.$The intrinsic value of an $..............$is the greater of zero or the difference between the stock price and the exercise price.

a$.$Time to Expiration

b$.$American call

c$.$Stock price

d$.$European call

$3.$In which one of the following types of contract between a seller and a buyer does the seller agree to sell a specified asset to the buyer today and then buy it back at a specified time in the future at an agreed future price.

a$.$call

b$.$repurchase agreement

c$.$short selling

d$.$swap

$4.$On March $2,$ a Treasury bill expiring on April $20$ had a bid discount of $5\mathrm{.}80,$ and an ask discount of $5\mathrm{.}86.$ What is the best estimate of the risk$-$free rate as given in the text?

a$\mathrm{.}6\mathrm{.}11\%$

b$\mathrm{.}5\mathrm{.}86\%$

c$\mathrm{.}6\mathrm{.}14\%$

d$\mathrm{.}5\mathrm{.}83\%$

$5.$What is the lowest possible value of a European put?

a$.$Max$[0,$ S$0$ X$(1+$ r$)-$T$]$

b$.$X$(1+$ r$)-$T

c$.$Max$(0,$ X $$ S$0)$

d$.$Max$[0,$ X$(1+$ r$)-$T $$ S$0)]$

$6........................$is also a contract between two parties a buyer and a seller to buy or sell something at a future date at a price agreed upon today.

a$.$Underlying Assets

b$.$A forward contract

c$.$Option

d$.$A futures contract

$7.$A portfolio consisting of a long call with an exercise price of X$,$ a short position in a non$-$dividend paying stock at an initial price of S$0,$ and the purchase of riskless bonds with a face value of X and maturing when the call expires. What should such a portfolio be worth?

a$.$C $+$ P $$ X$(1+$ r$)-$T

b$.$None of the above

c$.$C $$ S$0$

d$.$P $+$ S$0$ X$(1+$ r$)-$T

$8.$A market in which the price of an asset equals its true economic value, which is called the theoretical fair value. Spot and derivative markets are normally quite efficient.

a$.$Derivative market

b$.$Arbitrage

c$.$Efficient market

d$.$Hypothesis market

$9.$Which of the following inequalities correctly states the relationship between the difference in the prices of two European calls that differ only by exercise price

a$.($X$2$ X$1)>=$ Ce$($S$0,$T$,$X$1)$ Ce$($S$0,$T$,$X$2)$

b$.($X$2$ X$1)(1+$ r$)-$T $>=$ Ce$($S$0,$T$,$X$1)$ Ce$($S$0,$T$,$X$2)$

c$.($X$2$ X$1)(1+$ r$)-$T $>=$ Ce$($S$0,$T$,$X$1)+$ Ce$($S$0,$T$,$X$2)$

d$.($X$2$ X$1)>=$ Ce$($S$0,$T$,$X$2)$ Ce$($S$0,$T$,$X$1)$

$10.$Suppose you hold a call option. The stock price has recently been increasing$-$making your call option more valuable. Through what process might you take advantage of the liquid nature of the options market?

a$.$settling up

b$.$mark to market order

c$.$contract reconciliation

d$.$offsetting order