1. Both forward and futures contracts are traded on exchanges. : False 2. Futures contracts are standardized; forward contracts are not. : True 3. The S&P500 index futures contract is a physical delivery contract. The pork bellies futures contract is a cash-settled contract. : False 4. An American option can be exercised at any time during its life. : True 5. A put option will always be exercised at maturity if the strike price is greater than the underlying asset price. : True
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giving someone else the right to buy an asset from you. It gives you a payoff of -max(St-K-0)=min (K-St‚0) On the other hand‚ buying a put option involves buying an option from someone else. It gives you a payoff of Max (K-St‚0) It may be noted that in both cases the payoff is K-St. When you write a call option‚ the payoff is negative or zero since the counterparty chooses to exercise. When you buy a put option‚ the payoff is zero or positive since you choose whether to exercise or not.
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maximize his own payoff‚ confession is the dominant strategy for each. However‚ if the other player acts similarly‚ then they both betray and both get a lower payoff than they would get by staying silent. Rational self-interested decisions lead the two players to betray each other even though each player’s individual reward would be greater if they both played cooperatively. Hence‚ a seeming dilemma and a conflict between the individual incentives of players and their joint payoff maximization. When
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Option price vs. time to maturity: We observe that as time to maturity increases‚ so too does the respective price for both call and put options. This can be explained by the increasing time value characteristic of options. This asymmetry of option payoffs offers a higher probability of finishing in the money for options with longer maturities‚ whilst capping the losses on the premium paid. There were some abnormalities‚ most prevalent in the ABAT put option‚ which may be due to illiquidity considering
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MFIN6003 Derivative Securities Dr. Huiyan Qiu End-of-chapter Questions for Practice (with Answers) Following is a list of selected end-of-chapter questions for practice from McDonald’s Derivatives Markets. For students who do not have a copy of the McDonald’s book‚ be aware that a copy of the book is reserved at the main library of the University of Hong Kong for you to borrow for short period of time. Answers provided are for your reference only. It is complied directly from the solution
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Situation Re- port Comment 1. A company has not followed generally accepted accounting principles in the recording of its leases. 7 2. A company has not followed generally accepted accounting principles in the recording of its leases. The amounts involved are immaterial. 1 3. A company valued its inventory at current replacement cost. While the auditor believes that the inventory costs do approximate replacement costs‚ these costs do not approximate any GAAP inventory valuation method
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A Tribute to John Nash It sounds like a Sport’s man dream. A Person got a one million dollar prize for their skill at analysing games. They are not television Pundits or armchair critics of Manchester United or Chelsea‚ but an Economists who won the Nobel Prize for economics for his studies of game theory. John Nash‚ In Pop culture he remembered as the man behind “A Beautiful Mind” and for the economists or specialists he’ll be remembered as a brilliant mathematician who won Nobel Prize in Economic
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Sequential Investment‚ Hold-up‚ and Strategic Delay Juyan Zhang∗ and Yi Zhang† December 20‚ 2010 Abstract We investigate hold-up with simultaneous and sequential investment. We show that if the encouragement effect of sequential complementary investments dominates the delay effect‚ sequential investment alleviates the underinvestment caused by the hold-up problem. Further‚ if it is allowed to choose when to invest‚ strategic delay occurs when the encouragement effect of sequential complementary
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8Teaching Strategies 1. Take Five Procedure: In pairs‚ students take five minutes to orally review a concept and present it to the class‚ usually at the beginning or end of a class period. Purpose • Briefly consolidate or reinforce learning. Payoff Students will: • develop a strategy that can be used to review content material in all areas. • share responsibility for teaching and reviewing with each other. • “talk” their way into meaning and understanding through verbal rehearsal. • perceive
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An Expectancy Model of Chinese-American Differences in Conflict-Avoiding Author(s): Ray Friedman‚ Shu-Cheng Chi and Leigh Anne Liu Reviewed work(s): Source: Journal of International Business Studies‚ Vol. 37‚ No. 1 (Jan.‚ 2006)‚ pp. 76-91 Published by: Palgrave Macmillan Journals Stable URL: http://www.jstor.org/stable/3875216 . Accessed: 16/10/2012 01:32 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use‚ available at . http://www.jstor.org/page/info/about/policies/terms
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