the economics of money, banking, and financial markets

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9. 
   

   Options on futures contracts are referred to as ____.
   A) stock options
   B) futures options
   C) American options
   D) individual options
   Answer: B
   Diff: 2 Type: MC Page Ref: 334
   Skill: Recall
   Objective List: 14.3 Explain how managers of financial institutions use financial derivatives to
   manage interest-rate and foreign-exchange risk

   
   


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(n) ____.
    A) call option
    B) put option
    C) American option
    D) European option
    Answer: A
    Diff: 2 Type: MC Page Ref: 335
    Skill: Recall
    Objective List: 14.3 Explain how managers of financial institutions use financial derivatives to
    manage interest-rate and foreign-exchange risk

    
    


11. 
    

    A call option gives the owner ____.
    A) the right to sell the underlying security
    B) the obligation to sell the underlying security
    C) the right to buy the underlying security
    D) the obligation to buy the underlying security
    Answer: C
    Diff: 2 Type: MC Page Ref: 335
    Skill: Recall
    Objective List: 14.3 Explain how managers of financial institutions use financial derivatives to
    manage interest-rate and foreign-exchange risk

    
    


12. 
    

    A call option gives the seller ____.
    A) the right to sell the underlying security
    B) the obligation to sell the underlying security
    C) the right to buy the underlying security
    D) the obligation to buy the underlying security
    Answer: B
    Diff: 2 Type: MC Page Ref: 335
    Skill: Recall
    Objective List: 14.3 Explain how managers of financial institutions use financial derivatives to
    manage interest-rate and foreign-exchange risk