When the Existing Spot Rate Exceeds the Exercise Price, a Call

question 111

Multiple Choice

When the existing spot rate exceeds the exercise price, a call option is ____, and a put option is ____.​

• A) ​out of the money; in the money
• B) ​out of the money; out of the money
• C) ​in the money; in the money
• D) ​in the money; out of the money

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Definitions:

Bundled Securities

Financial instruments that combine multiple individual assets, such as stocks or bonds, into a single package for investment purposes.

Household Debt

The total amount of money owed by all members of a household, including mortgages, credit cards, and other loans.

Reserve Assets

Funds or other assets held by a central bank or monetary authority to back its liabilities and support the stability of its currency.

Adjustable Rate Mortgages

A type of mortgage loan where the interest rate can change, typically in relation to an index, and thus monthly payments can increase or decrease.