MA373 F11 Quiz 6-1

MA373 F11 Quiz 6-1 - to make it true. a. If the spot price...

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Math 373 Quiz 6 November 29, 2011 1. There are three exercise styles for options - American style, Bermuda style, and European style. Define each one.
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2. Elley enters into a short one year forward contract on the stock of Ma Company. The current stock price of the Ma Company is 100 and the forward price is 105. Complete the following table. Show your work. Spot Price at Expiration Payoff Future Value of Cost Profit 90 100 110
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3. Circle each of the following that are true. For each statement that is false, change the sentence
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Unformatted text preview: to make it true. a. If the spot price at expiration on a put contact is greater than the exercise price, then the profit is zero. b. Your automobile insurance policy is a derivative. c. A hurricane is a non-diversifiable risk. d. The maximum profit on the sale of a call option is the premium. 4. Jon purchased a stock at the current spot price of . S One year later, Jon sold the stock for 200 for a profit of 50. The annual effective risk free interest rate is 8%. Determine . S...
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MA373 F11 Quiz 6-1 - to make it true. a. If the spot price...

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