IBM (IBM) FIGURE 15.1 Options on IBM March 2, 2007 Sure The Wall St Jornal Online, Mch. 2007 7.50 9914 Expiration Strike Mar 2007 85 Apr 2007 85 Jul 2007 85 Oct 2007 85 Mar 2007 90 Apr 2007 90 Jul 2007 90 Oct 2007 90 Mar 2007 95 Apr 2007 95 Jul 2007 95 Oct 2007 95 4649 Underlying stock price: 90.90 Put Last Volume Open Interest 020 431 1487 0.70 455 10367 1.55 165 2.10 2 405 1.05 8315 2.10 5499 11885 3.20 1067 2795 1003 4.00 2365 27969 4.90 3502 16796 5.20 3334 2780 5.90 1 788 Call Last Volume Open Interest 172 1437 8.10 235 7167 9.40 27 1051 11.20 1 21 2.20 3875 3088 3.78 3779 7016 5.50 108 1625 7.70 159 0.35 1605 28920 1.35 691 10348 3.00 234 2805 4.70 61 421 Refer to Figure 15.1 above , assuming that the stock price on the maturity date is $90. What is the payoff of each October short call option with strike price $95? A. $0.00 B. -$4.70 C.-$5.00 D. $5.00 O E. $4.70 According to capital asset pricing theory, the key determinant of portfolio returns is A. The interest rate risk B. Economic factors C. The degree of diversification D. The firm specific risk of the portfolio E. The systematic risk of the portfolio QUESTION 32 Futures contracts have many advantages over forward contracts except that A. Futures contracts are tailored to the specific needs of the investor B. Futures trading preserves the anonymity of the participants C. None of the answer selections D. Counterparty credit risk is not a concern on futures E. Futures positions are easier to trade