TABLE 7.1 Use the Table to Answer Following Question(s)

question 21

Multiple Choice

TABLE 7.1
Use the table to answer following question(s) .
April 19, 2009, British Pound Option Prices (cents per pound, 62,500 pound contracts) .

-Refer to Table 7.1. What was the closing price of the British pound on April 18, 2009?

• A) $1.448/£
• B) £1.448/$
• C) $14.48/£
• D) none of the above

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Definitions:

Maturity at Issue

The predetermined date when a financial instrument, such as a bond, will come due and the principal is to be paid back to investors.

Default Risk

The potential risk that an issuer of a bond or other debt security will be unable to make principal and interest payments when due.

Collateral Trust Bond

A type of bond that is secured by a pledge of collateral, typically securities, placed under the trust of a third party.

Securities

Financial instruments representing ownership (stocks), a debt agreement (bonds), or rights to ownership (derivatives) that can be bought and sold in financial markets.