QUESTION: 5

Which of the following instruments simplifies the paperwork connected with loans that have multiple advance features?

Master note
Banker's acceptance
Indenture agreement
Note purchase agreement

Answer(s): A

QUESTION: 6

A put option on a company's stock has an exercise price of $20. On the delivery date, the stock is trading at $24 per share. What should the investor who has paid $2 for the option do?

Not exercise the option and lose $2.
Not exercise the option and lose $6.
Exercise the option and gain $2.
Exercise the option and gain $4.

Answer(s): A

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QUESTION: 7

A call option for a company has an exercise price of $50. The stock is currently trading at $60. At maturity, what should an investor who paid $3 for the option do?

Exercise the option and gain $7.
Exercise the option and gain $10.
Not exercise the option and lose $3.
Not exercise the option and lose $13.

Answer(s): A

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QUESTION: 8

In a typical swap transaction, two parties agree to exchange:

notional principal amounts.
amortization schedules.
maturity dates of obligations.
cash flows at future points in time

Answer(s): D

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QUESTION: 5

QUESTION: 6

QUESTION: 7

QUESTION: 8

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