little quiz

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YnqlTntn

Economics

Description

Attached is the document with each of my incorrect quiz questions. Please write an explanation of why each correct answer (which is indicated) is correct and why your original choice was not.

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A key difference between a call option and a put option is: the long position has the right to purchase by a call while the short position has the right to purchase by a put the long position has the right to purchase by a call while the long position has the right to sell by a put the long position has the right to purchase by a call while the short position has the right to sell by a put the long position has the right to sell by a call while the short position has the right to purchase by a put The long call is: obligated to purchase the underlying asset from the short call obligated to sell the underlying asset to the short call obligated to lend the underlying asset to the short call none of the above Which of the following positions has a right and not an obligation? Short call Long call Long forward Short forward Which of the following equations calculates a long put's value? none of the above Consider a call option that gives the long call the right to purchase the underlying asset for $4.56 in 0.25 years. The continuously compounded risk-free interest rate is 2.5%. The underlying asset price is $4.70. By how much will the long call change in value as the volatility of the underlying asset return increases from 5% to 45%? $0.66 $0.33 -$0.66 -$0.33 Consider a forward with expiration in 1 year. The underlying asset pays no income. The continuously compounded risk-free interest rate is 2.5%. The forward price is $45. By how much will the long forward increase in value as the underlying asset's market price increases from $52 to $53? $1 0 $1.09 None of the above The equation is simply a "cleaned up" version of: None of the above The recovery rate is: the value of the reference asset following the credit event expressed as a percentage of its face value both a and b none of the above Consider the following interest rate swap scenario: notional = $10 MM, actual days in quarter = 92, annualized floating rate = 2.5400%, and annualized fixed rate = 2.5400%. What is the floating leg payment? $62,088.89 $65,0911.89 $64,911.11 $127,000 When the underlying asset price is greater than the strike price: a long call is in-the-money a short put is out-of-the-money the long put's payoff is zero all of the above
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Explanation & Answer

I have uploaded the answers in the word document following each problem. Please let me know if you have any questions. Have an awesome day!

A key difference between a call option and a put option is:

the long position has the right to purchase by a call while the short position has the right to
purchase by a put
the long position has the right to purchase by a call while the long position has the right to
sell by a put
the long position has the right to purchase by a call while the short position has the right to
sell by a put
the long position has the right to sell by a call while the short position has the
right to purchase by a put
A call option means that the holder has the opportunity to buy part of the asset
in the future based on the price currently agreed upon. A put option means that
the holder has the opportunity to sell part of the asset in the future based on the
price currently agreed upon. In other words, a call option equals buying while a
put option equals sell...


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