Exam 9: Derivatives: Futures, Options, and Swaps

If the current closing price in the stock of XYZ, Inc. is $87.50 and the July expiration put options with a strike price of $80 are selling for $1.05, what is the intrinsic value of the option? What is the option premium?

A price of a futures contract for U.S. Treasury bonds listed as "111-15" is measured in:

The time value of the option can best be defined as

Considering a put option; if the price of the underlying asset increases:

An investor who purchases a call option is:

The two parts that make up an option's price are:

The seller of a put option is transferring the risk:

Explain why the two parties in a futures contract technically do not make a bilateral agreement with each other.

At expiration, the time value of an option:

A put option that is described as in the money would find:

A key use of interest-rate swaps is to:

The long position in a futures contract is the party that will:

As the time of settlement gets closer:

Considering interest-rate swaps, the swap rate is:

Suppose you purchase a put option to sell General Motors common stock at $80 per share in March. The current price of GM stock is $83 and the time value of the option is $1. What is the intrinsic value of the option?

Explain the popularity of options in the sense of the potential gains and losses they offer.

A call option is:

A U.S. Treasury bond dealer with a large portfolio who sells a futures contract for U.S. Treasury bonds is:

As an option approaches its expiration date, the value of the option approaches:

The option writer is: