The price of credit default swap

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Reference no: EM131918028

1. The price of a credit default swap (CDS) on a AAA-rated bond would be higher than the price of an otherwise identical BB-rated bond.

True

False

2. Suppose you hold a share of stock and a put option on that share. If the stock price is below the exercise price when the option expires the value of your position is the value of the stock.

True

False

3. You can sell a call on a stock that you do not own.

True

False

4. If the 3-month SPX futures is below the spot value, we can infer that markets expect the SPX to decline over the next 3 months.

True

False

5. If the current stock price is $50, the intrinsic value of a call option with an exercise price of 30 is

-20

0

20

50

none of the above

Reference no: EM131918028

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