International Finance And Treasury - Study Mode

[#341] If risk of financial security increases and supply curve shifts to left then impact on equilibrium of interest rate must
Correct Answer

(B) increases

Explanation

Solution: If risk of financial security increases and supply curve shifts to left then impact on equilibrium of interest rate must increases.

[#342] Markets in which derivatives are traded are classified as
Correct Answer

(D) derivative securities markets

Explanation

Solution: Markets in which derivatives are traded are classified as derivative securities markets. Derivative Securities Markets. Derivative securities (also called derivatives) are financial contracts whose values are derived from the values of underlying financial assets (such as securities).

[#343] Consider buying of put option, probability that a buyer would have negative payoff increases with the
Correct Answer

(A) increase in stock price

Explanation

Solution: Consider buying of put option, probability that a buyer would have negative payoff increases with the increase in stock price.

[#344] Price of an option is subtracted form time value of option to calculate
Correct Answer

(C) intrinsic value

Explanation

Solution: Price of an option is subtracted form time value of option to calculate intrinsic value. Intrinsic value refers to an investor's perception of the inherent value of an asset, such as a company, stock, option, or real estate. Knowing an investment's intrinsic value is useful for value investors who have a goal of buying stocks and other investments at a discount to this amount.

[#345] If intrinsic value of an option is $450 and price of an option is $560 then time value of an option is
Correct Answer

(A) $110

Explanation

Solution: Time value of an option = Price of an option - Intrinsic value of an option = $560 - $450 = $110.