1) Which of the following investments does require initial margin? A. buying a call option B. buying a...

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Finance

1) Which of the following investments does requireinitial margin?
A. buying a call option
B. buying a put option
C. buying a futures contract
D. none of the above
2) If the underlying asset has a current market price of$40 and the strike price on an option contract on that asset is$45, then:
A. the option is in-the-money if it is a putoption
B. the option has $5 of intrinsic value if it is a calloption
C. the option has $5 time value if it is a putoption
D. all of the above
3) To settle a long call position that is exercised atexpiry, you would:
A. receive a cash amount equal to the asset price minusthe option strike price
B. pay the strike price and receive the underlyingasset
C. both (A) and (B) are possible
D. none of the above
4) Which of the following investments does requireinitial margin?
A. writing a call option
B. writing a put option
C. shorting a futures contract
D. all of the above
5) If the underlying asset has a current market price of$40 and the strike price on an option contract on that asset is$45, then:
A. the option is in-the-money if it is a calloption
B. the option has $0 of intrinsic value if it is a calloption
C. the option has $5 time value if it is a calloption
D. none of the above
6) If the underlying asset has a current market price of$40 and the strike price on an option contract on that asset is$45, then:
A. the option is in-the-money if it is a putoption
B. the option has $0 of intrinsic value if it is a calloption
C. the option has $5 intrinsic value if it is a putoption
D. all of the above
7) Which of the following investments does NOT requireinitial margin?
A. writing a call option
B. buying a put option
C. writing a futures contract
D. none of the above, they all do require initialmargin
8) Suppose you buy a futures contract on an asset with afutures price of $50. At expiry of the futures contract the marketprice of the asset is $45:
A. the contract is out-the-money and you would notexercise
B. the contract is in-the-money and you would make aprofit
C. the contract is in-the-money, but we don’t know ifthe investment made a profit or loss without knowing the originalpremium at the time of the trade
D. you would make a loss on the investment

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1 Which of the following investments does require initial margin Option C is correct Buying a Futures Contract Explanation To buy a future contract on needs to put initial margin for buying option See Answer

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1) Which of the following investments does requireinitial margin?A. buying a call optionB. buying a put optionC. buying a futures contractD. none of the above2) If the underlying asset has a current market price of$40 and the strike price on an option contract on that asset is$45, then:A. the option is in-the-money if it is a putoptionB. the option has $5 of intrinsic value if it is a calloptionC. the option has $5 time value if it is a putoptionD. all of the above3) To settle a long call position that is exercised atexpiry, you would:A. receive a cash amount equal to the asset price minusthe option strike priceB. pay the strike price and receive the underlyingassetC. both (A) and (B) are possibleD. none of the above4) Which of the following investments does requireinitial margin?A. writing a call optionB. writing a put optionC. shorting a futures contractD. all of the above5) If the underlying asset has a current market price of$40 and the strike price on an option contract on that asset is$45, then:A. the option is in-the-money if it is a calloptionB. the option has $0 of intrinsic value if it is a calloptionC. the option has $5 time value if it is a calloptionD. none of the above6) If the underlying asset has a current market price of$40 and the strike price on an option contract on that asset is$45, then:A. the option is in-the-money if it is a putoptionB. the option has $0 of intrinsic value if it is a calloptionC. the option has $5 intrinsic value if it is a putoptionD. all of the above7) Which of the following investments does NOT requireinitial margin?A. writing a call optionB. buying a put optionC. writing a futures contractD. none of the above, they all do require initialmargin8) Suppose you buy a futures contract on an asset with afutures price of $50. At expiry of the futures contract the marketprice of the asset is $45:A. the contract is out-the-money and you would notexerciseB. the contract is in-the-money and you would make aprofitC. the contract is in-the-money, but we don’t know ifthe investment made a profit or loss without knowing the originalpremium at the time of the tradeD. you would make a loss on the investment