Podcast
Questions and Answers
Which party in an options contract has the right to trade the underlying asset?
Which party in an options contract has the right to trade the underlying asset?
- Seller of the option
- Option writer
- Buyer of the option (correct)
- Both parties
What is the price determined by both parties in an options contract known as?
What is the price determined by both parties in an options contract known as?
- Benchmark rate
- Premium
- Interest rate
- Strike price (correct)
In a futures contract, who holds the obligation to buy/sell the underlying asset at the contract's expiration?
In a futures contract, who holds the obligation to buy/sell the underlying asset at the contract's expiration?
- Option writer
- Both parties
- Seller of the futures contract
- Buyer of the futures contract (correct)
What is a primary reason for managing risk in investment portfolios?
What is a primary reason for managing risk in investment portfolios?
What type of risk is considered the most relevant by investors when managing their portfolios?
What type of risk is considered the most relevant by investors when managing their portfolios?
In capital budgeting, what is the primary focus of decision-making?
In capital budgeting, what is the primary focus of decision-making?
What happens if a buyer of an options contract decides not to exercise their right to trade the underlying assets?
What happens if a buyer of an options contract decides not to exercise their right to trade the underlying assets?
What distinguishes an option contract from a futures contract?
What distinguishes an option contract from a futures contract?
What is the role of an option writer in an options contract?
What is the role of an option writer in an options contract?
When managing risk in their portfolios, what type of risk do corporate executives often express concern about?
When managing risk in their portfolios, what type of risk do corporate executives often express concern about?
