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solution

Which of the following
causes the futures price of an asset to decrease, everything else held
constant?

O A. Lower income
received while holding the underlying asset.

O B. Higher expected
spot price for the underlying asset.

O C. Longer the time to
maturity of the futures contract.

D. Higher risk-free rate of interest.

QUESTION 44

A put option with a
strike price of £32 can be bought for £6. What will be your net profit if you
exercise this put option and the stock price is £22 at maturity?

O A. £4.00

B. £6.00

O C. £8.00

OD. £10.00

Suppose you buy a put and short sell one
share. What is your cash payoff when the option expires? (Ignore the costs of
the option and the share). X is the strike price and ST is the price of the
share at time to maturity.

O A. Receive -(ST-X) if
ST < X and receive X if ST > X.

O B. Receive Stif ST < X and receive
-(ST-X) if ST > X.

O C. Receive Stif ST < X and receive X if
ST > X.

O D. Receive X if ST < X and receive -ST if
St > X.

QUESTION 46

Based on the profit and
loss profile of a long European call option, the writer will experience

O A. Limited losses but
unlimited profits.

O B. Unlimited losses
but limited profits.

O C. Limited losses and
limited profits

O D. Unlimited losses
and unlimited profits

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