QUESTION 47 Consider a European call option for 100 shares of XYZ Corporation with a strike price of $150 per share that matures in 18 months What rights does the buyer of the option have a Between now and 18 months from now, the buyer has the right to buy 100 shares of XYZ b Between now and 18 months from now, the buyer has the right, but not the obligation to purchase 100 shares of XYZ Corporation for $150 per share c At the maturity date, 18 months from now, the buyer has the right but not the obligation to sell 100 shares of XYZ Corporation for $150 per share d At the maturity date, 18 months from now, the buyer has the right but not the obligation to purchase 100 shares of XYZ Corporation for $150 per share QUESTION 48 What are the two purposes of options contracts (1) Options contribute to the price discovery process for their underlying security (2) Options do not satisfy any useful purpose for society, rather they are pure gambling and speculative devices (3) Options increase the salience of the underlying security for the option holder and increase the persons attention on the underlying security (4) When purchasing a house in the U S , the buyer of the house is legally required to purchase a call option on the value of the house a 1 and 2 b 1 and 3 c 2 and 3 d 2 and 4

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QUESTION 47 Consider a European call option for 100 shares of XYZ Corporation with a strike price of $150 per share that matures in 18

QUESTION 47

Consider a European call option for 100 shares of XYZ Corporation with a strike price of $150 per share that matures in 18 months. What rights does the buyer of the option have?

		a. Between now and 18 months from now, the buyer has the right to buy 100 shares of XYZ.
		b. Between now and 18 months from now, the buyer has the right, but not the obligation to purchase 100 shares of XYZ Corporation for $150 per share.
		c. At the maturity date, 18 months from now, the buyer has the right but not the obligation to sell 100 shares of XYZ Corporation for $150 per share.
		d. At the maturity date, 18 months from now, the buyer has the right but not the obligation to purchase 100 shares of XYZ Corporation for $150 per share.

QUESTION 48

What are the two purposes of options contracts? (1) Options contribute to the price discovery process for their underlying security. (2) Options do not satisfy any useful purpose for society, rather they are pure gambling and speculative devices. (3) Options increase the salience of the underlying security for the option holder and increase the persons attention on the underlying security. (4) When purchasing a house in the U.S., the buyer of the house is legally required to purchase a call option on the value of the house.

a. 1 and 2.

b. 1 and 3.

c. 2 and 3.

d. 2 and 4.