- The higher the exercise price of a call option, the greater the
A price of an option.
B premium received by the seller of the call.
C leverage for a fixed dollar investment by option buyer.
Which of the following swaps will best make a bet on the credit risk premium of London banks?
- Basis swap.
- Plain vanilla swap.
- Overnight indexed swaps
Which of the following statements is most likely correct for a 3 × 9 FRA?
- The contract will expire in 270 days.
- The underlying rate will be 180 day LIBOR.
- The underlying loan will be settled in 90 days
Please share the answer of all the 3 questions.
As per me answer are: Q1- (C), Q2- (A), Q3- (C)
First 2 question are correct but 3rd ans is B…
Can u explain the logic of first 2 question and if possible 3rd also.
1)value of call option is indirectly related to excercise value
2)Thts the definition of basis swap
3) Its a FRA not a synthetic FRA so underlying rate will be 180 day LIBOR and in the same question 1st option will be for synthetic FRA