[Solved] Which of the following are true regarding the options markets?

Q.	Which of the following are true regarding the options markets?
A.	Hedgers and speculators both attempt to lower risk.
B.	Hedgers attempt to lower risk, while speculators attempt to make riskless profits.
C.	Hedgers and speculators are both necessary in order for the market to be liqu
Answer» C. Hedgers and speculators are both necessary in order for the market to be liqu

3.4k

Do you find this helpful?

View all MCQs in

International Financial Management

Discussion

No comments yet

Related MCQs

Assume that Patton Co. will receive 100,000 New Zealand dollars (NZ$) in 180 days. Today's spot rate of the NZ$ is £0.35, and the 180-day forward rate is £0.36. A call option on NZ$ exists, with an exercise price of £0.37, a premium of £0.01, and a 180- day expiration date. A put option on NZ$ exists with an exercise price of £0.36, a premium of £0.01, and a 180-day expiration date. Patton Co. has developed the following probability distribution for the spot rate in 180 days: Possible Spot Rate in 90 Days Probability £0.30 10% £0.35 60% £0.40 30% The probability that the forward hedge will result in more U.S. dollars received than the options hedge is _______ (deduct the amount paid for the premium when estimating the U.S. dollars received on the options hedge).
Assume that Patton Co. will receive 100,000 New Zealand dollars (NZ$) in 180 days. Today's spot rate of the NZ$ is £0.35, and the 180-day forward rate is £0.36. A call option on NZ$ exists, with an exercise price of £0.37, a premium of £0.01, and a 180-day expiration date. A put option on NZ$ exists with an exercise price of £0.36, a premium of £0.01, and a 180-day expiration date. Patton Co. has developed the following probability distribution for the spot rate in 180 days: Possible Spot Rate in 90 Days Probability £0.30 10% £0.35 60% £0.40 30% The probability that the forward hedge will result in more U.S. dollars received than the options hedge is _______ (deduct the amount paid for the premium when estimating the U.S. dollars received on the options hedge).
European currency options can be exercised _______; American currency options can be exercised _______.
Which of the following is true of options?
Which of the following is true of foreign exchange markets?
Which of the following is not true regarding host government attitudes towards foreign direct investment (FDI)?
Which of the following is not true regarding letters of credit?
Which of the following is not true regarding a target's previous cash flows?
Which of the following are rules to use when choosing between forward contracts and currency options:
Which of the following institutions is the most important participant in foreign currency markets?