ENGIN 120 Study Guide - Midterm Guide: Call Option, Relative Risk, Systematic Risk
Document Summary
Part 1: concepts. (20 points: circle the only correct answer. 1. 7 a(n) _____ contract is a legally binding agreement between two parties calling for the purchase/sale of an asset in the future at an agreed-upon price today: forward contract, future contract, swap contract, option contract, cross contract. 1. 8 in which of the following arrangements, does money not change hands (i. e. from one contracting party to another) when the contract is written: future contracts. Forward contracts: i only, ii only, iii only, i and ii only, i and iii only. 1. 9 a perfect hedge in one that results in a completely flat risk profile. 1. 10 an increase in which of the following, all else the same, leads to an increase in call option value: exercise price. Volatility: i and iii only, ii and iv only, i, ii, and iii only, i, ii and iv only, ii, iii and iv only.
