Gabriella continues to help Ronaldo understand options and discusses the obligations of a "put" option writer if the option is exercised by the holder. For the writer, which of the following obligations is correct?

• Purchase the underlying asset and receive the exercise price
• Deliver the underlying asset and receive the exercise price
• Deliver the underlying asset and pay the exercise price
• Purchase the underlying asset and pay the exercise price

HNIC shares are currently trading at $67.20 per share. Isabella purchases a "September 65 Call" at $2.25. What is the price at which this position will become profitable for Isabella?

• At a price below $65.00
• At a price above $67.25
• At a price equal to $62.75
• At a price above $69.45

The main attraction of warrants is their ...

• Liquidity
• Leverage potential
• Longer expiration, compared to rights
• Shorter expiration, compared to rights

The current share price for XYZ Corp is $32.00. An October 30 call is priced a $3.45, an October 34 put is priced at $1.40, an October 30 put is priced at $1.30 and an October 34 call is priced at $3.30. Which of these four options are out-of-the-money?

• October 30 Call and October 34 Put
• October 34 Call and October 30 Put
• October 30 Call
• October 34 Put

The two general categories of assets that are used as "underlying assets" for derivative contracts are ....

• Futures and forwards
• Puts and calls
• Stocks and bonds
• Commodities and financials

There are two types of options (based on exercise dates), "European" and "American". When can a European-style option be exercised?

• Only at the expiry date
• Any time after expiry date
• At any time on, or before, expiry
• Never

The use of "margin" to complete transactions is common for "futures" and "forwards" as well as options. But, for "futures" and "forward" contracts, the balance of funds in an investors account may not drop below agreed levels at any time the contract is in place. This requirement is referred to as what type of margin?

• Original
• Minimum
• Cash-settled
• Maintenance

If a futures contract is subject to a process of daily settlement of trading gains and losses, it is known as ...

• Initial margin
• Cash settled
• Maintenance margin
• Marking-to-Market

A "rights" offering is a common practice whereby a company will offer an option to existing shareholders to purchase additional shares. Why might a company choose to do this?

• Current market conditions are favourable to convertible securities
• The company wants to give current shareholders the opportunity to maintain their proportionate interest in the company
• Current market conditions are favourable to issuing ordinary common shares
• The company wants to give new shareholders the opportunity to acquire shares