Exam 9: Derivatives: Futures, Options, and Swaps

If the current closing price of the stock of XYZ Inc., is $87.50 and the July expiration call options with a strike price of $80 are selling for $9.45, what is the intrinsic value of the option? What is the time value of the option?

As the chapter points out, there have been many cases where derivatives have led to a lot of abuse.If this is the case, why do derivatives exist?

A call option described as out of the money would find:

The clearing corporation's main role in the futures market is to:

Standardization of derivative contracts:

One key difference between swaps and option contracts is:

If the option holder is the individual with the options, why is anyone an option writer?

The value of a derivative is determined by:

Identify four factors that will cause the value of call options to increase.

The purpose of derivatives is to:

Options are popular because of all of the following EXCEPT:

Derivatives are financial instruments that:

An investor who purchases a call option is:

Why do government debt managers often use interest-rate swaps?

We have a futures contract for the purchase of 10,000 bushels of wheat at $3.00 per bushel.If the price of wheat were to increase to $3.50, explain what happens to the parties involved in the contract in terms of marking to market.Be sure to identify who is long and short and specifically how much is transferred.

Forward contracts are:

A call option is:

An individual who neither uses nor produces a commodity but buys a futures contract for the asset is:

How did CDS' contribute to the financial crisis of 2007-2009?

As the time of settlement gets closer: