Instructions: Answer True or False

5) A futures contract differs from a forward contract in that the former typically requires a margin account and is typically a standardized rather than customized contract _____ _____

6. The value of an option can be allocated to two component parts, the time and the intrinsic value _____ _____

7. A put option and a call option refer to the right to buy and sell a quantity respectively _____ _____

8. If a put option at an exercise price of $12 per unit when the market value per unit is $13 has a value of $0.50 per option, then there is no time value associated with the option _____ _____

9. An option related to a commodity with a lot of price volatility would tend to increase the time value of the option _____ _____