Choose the correct answer from the following choices. Make your selection clear and distinct, otherwise you will not get credit.

1.     Options and futures are derivatives, however they differ because options are valuable _______ and futures are _______, options have ______ payoffs, futures ______ payoffs. 

    A)    rights, obligations, nonlinear, linear

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    B)    rights, linear, obligations, nonlinear 

    C)    obligations, rights, linear, nonlinear

    D)    obligations, linear, rights, nonlinear 

2.    Rain-checks are like  _______, car insurance is like _________. 

    A)    currency forwards, currency futures 

    B)    commodity-options, commodity-futures

    C)    index forwards, index futures

    D)    call-options, put-options 

3.    Spot futures parity is an equilibrium condition involving the following variables: 

    A)    stock price, exercise price, time to maturity, interest rates

    B)    domestic interest rate, forward rate, foreign interest rate, spot rate 

    C)    forward rates, spot rates, interest rates, time to maturity 

    D)    domestic interest rate, stock price, foreign interest rate, exercise price 

4.    Cash and carry arbitrage and reverse cash and carry arbitrage apply 

    A)    when dealing with dividend paying stocks

    B)    when dealing with derivative markets involving options

    C)    when dealing with non-dividend paying stocks 

    D)    when dealing with an equilibrium condition 

5.    One of the following is not a determinant of option values 

    A)    stock price  

    B)    exercise price 

    C)    rate of return on stock 

    D)    time to maturity

There are additional questions in the document attached. 

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