Assume you pay a premium of $0.80/bu for a soybean call option with a strike price of $9.00/bu and that the current futures price is $9.30/bu. What is the option's current intrinsic value?
A. $0.20/bu
B. $0.30/bu
C. $0.50/bu
D. $0.80/bu
Ans: B. $0.30/bu
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The stricter the enforcement of a price ceiling, the
A) smaller is the difference between the black market price and the legal market price of the good. B) larger is the difference between the black market price and the legal market price of the good. C) greater is the amount of the good available in total, from either the legal market or the black market. D) Both answers B and C are correct.
The demand for gold increases, other things equal, when
A) the market for silver becomes more liquid. B) interest rates are expected to rise. C) interest rates are expected to fall. D) real estate prices are expected to increase.
"The income elasticity of a good is positive if a consumer increases the total spending on that good as a result of an increase in its market price." Do you agree or disagree? Why?
What will be an ideal response?
If two goods were to become even stronger substitutes than before, an economist would expect the cross elasticity to become:
a. positive. b. one. c. zero. d. smaller. e. larger.