Which of the following is true of an option?
a. It is based on market volatility and thus assures a high profit to risk preferring individuals.
b. It provides the holder the right (but does not obliges him/her) to buy or sell a certain quantity of an underlying asset before its expiration.
c. The greater the volatility of the underlier's price the less likely that the option will go "in the money" before it expires.
d. Options help individuals to minimize their business risks by transferring it to others for a fixed time interval.
B
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A patent creates a monopoly by restricting ________
A) demand for the product B) the number of complements for the product C) the amount of advertising that can be undertaken D) entry into the market
Denise is thinking about setting up a butterfly garden in her backyard. She estimates that it will cost her $2,000 to purchase and install special plants and an irrigation system to attract butterflies. The benefit she expects to receive is $1,800 . In addition, neighbor Billy will receive a benefit of $150 and neighbor Sammy will receive a benefit of $100 . From this, we can conclude that
a. butterflies are a negative externality for Billy and Sammy b. Denise will set up the butterfly garden without any help from her free-rider neighbors c. if Sammy refuses to contribute to the butterfly garden, he will be unable to enjoy its benefits if it is built d. if Billy refuses to contribute to the butterfly garden, Denise will not have one e. if Billy and Sammy contribute the amounts at which they value the butterfly garden, Denise will set it up. Otherwise, no garden.
Suppose you have $200 with which you can buy shares of stock from two companies: ABC Hot Chocolate Company and XYZ Lemonade. Each company's stock currently sells for $100 per share. If the temperature next year is lower than average, the stock price for ABC will increase by $20, and the stock price for XYZ will not change. If the temperature next year is higher than average, the stock price for XYZ will increase by $20, and the stock price for ABC will not change. There is a 50 percent chance that it will be colder than average next year, and a 25 percent chance that it will be warmer than average. If you purchase one share of ABC stock and one share of XYZ stock, your expected gain will be ________.
A. $15 B. $0 C. $10 D. $40
Which price would you expect to rise the most in a high-income growing economy?
A. Semiconductors for personal computers B. Tickets to a ballet performance C. Passenger automobiles D. Blu-ray players