The intrinsic value of an option:
A. is the amount the investor believes the option will be worth on the expiration date.
B. is equal to price of the underlying asset.
C. is the amount the option is worth if it is exercised immediately.
D. cannot be determined without knowing the future price of the underlying asset.
Answer: C
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Which of the following is an example of fiat money?
A. Gold B. Paper dollars C. Solid silver coins. D. None of the above is correct.
You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that
a. the mayor thinks demand is elastic, and the city manager thinks demand is inelastic. b. both the mayor and the city manager think that demand is elastic. c. both the mayor and the city manager think that demand is inelastic. d. the mayor thinks demand is inelastic, and the city manager thinks demand is elastic.
Which of the following statements is false?
A) A call option will sell for a fraction of the cost of the stock. B) A futures contract can be written for a commodity (such as wheat), or for a currency. C) A futures contract gives the owner the right, but not the obligation, to buy or sell a commodity at a specified price on a given future date. D) The specified price at which an option gives the owner the right to buy a stock at is called the stick price.
Answer the following statement(s) true (T) or false (F)
1. Social welfare consequences are ambiguous when two or more manufacturers merge to take advantage of economies of scale. 2. When a monopoly supplier acquires a monopoly manufacturer, the vertical merger intensifies the supplier's use of monopoly power over the manufacturer. 3. A buy-out is more likely to delay a rival's reemergence than is predatory pricing. 4. Economic analysis suggests that resale price maintenance is primarily used by manufacturers to keep prices artificially high. 5. A firm has the incentive to cheat on a cartel agreement only when it fears that other cartel members will also cheat.