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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