commonly referred to as a zero. A strip bond has no reinvestment risk because the payment to the investor occurs only at maturity. C) profit; 3000 23) If, for a 1000 premium, you buy a 100,000 call option on bond futures with a strike price of 114, and at the expiration date the price is 110, your _. 18) If you buy a call option on Treasury futures at 115, and at expiration the market price is 110, the _ will _ exercised. These packages may consist of a combination of interest (coupon) and/or principal strips. 15) A put option gives the owner the A) right to sell the underlying security. 10) An option that gives the owner the right to buy a financial instrument at the exercise price within a specified period of time is a A) call option. B) loss; 1000 24) If, for a 1000 premium, you buy a 100,000 put option on bond futures with a strike price of 110, and at the expiration date the price is 114, your _. 12) A call option gives the seller the B) obligation to sell the underlying security.
A) sell securities in the future. Strip bonds are normally available from investment dealers maturing at terms up to 30 years. C) price of the underlying asset.
8) A person who agrees to buy an asset at a future date is going. Investors also get accounts handled by financial institutions. 26) The number of futures contracts outstanding is called D) open interest. 29) All other things held constant, premiums on call options will increase when the A) exercise price falls. A) reduces interest-rate risk.