An option is a a contract giving the seller writer of

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26. An "option" is A. a contract giving the seller (writer) of the option the right, but not the obligation, to buy (call) or sell (put) a given quantity of an asset at a specified price at some time in the future. B. a contract giving the owner (buyer) of the option the right, but not the obligation, to buy (call) or sell (put) a given quantity of an asset at a specified price at some time in the future. C. a contract giving the owner (buyer) of the option the right, but not the obligation, to buy (put) or sell (call) a given quantity of an asset at a specified price at some time in the future. D. a contract giving the owner (buyer) of the option the right, but not the obligation, to buy (put) or sell (sell) a given quantity of an asset at a specified price at some time in the future.
27. An investor believes that the price of a stock, say IBM's shares, will increase in the next 60 days. If the investor is correct, which combination of the following investment strategies will show a profit in all the choices? (i) - buy the stock and hold it for 60 days (ii) - buy a put option (iii) - sell (write) a call option (iv) - buy a call option (v) - sell (write) a put option A. (i), (ii), and (iii) B. (i), (ii), and (iv) C. (i), (iv), and (v) D. (ii) and (iii) 28. Most exchange traded currency options A. mature every month, with daily resettlement. B. have original maturities of 1, 2, and 3 years. C. have original maturities of 3, 6, 9, and 12 months. D. mature every month, without daily resettlement. 29. The volume of OTC currency options trading is A. much smaller than that of organized-exchange currency option trading. B. much larger than that of organized-exchange currency option trading. C. larger, because the exchanges are only repackaging OTC options for their customers. D. none of the above
30. In the CURRENCY TRADING section of The Wall Street Journal , the following appeared under the heading OPTIONS: Which combination of the following statements are true? (i)- The time values of the 68 May and 69 May put options are respectively .30 cents and .50 cents. (ii)- The 68 May put option has a lower time value (price) than the 69 May put option. (iii)- If everything else is kept constant, the spot price and the put premium are inversely related. (iv)- The time values of the 68 May and 69 May put options are, respectively, 1.63 cents and 0.83 cents. (v)- If everything else is kept constant, the strike price and the put premium are inversely related. A. (i), (ii), and (iii) B. (ii), (iii), and (iv) C. (iii) and (iv) D. ( iv) and (v)

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