The Standardization of Option Contracts and the Creation of the Options

question 120

True/False

The standardization of option contracts and the creation of the Options Clearing Corporation are two important results of the opening of the Chicago Board of Options Exchange.

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Definitions:

Rising Rate

An increasing trend in interest or inflation rates over a certain period.

Maturity Value

The amount to be paid to the holder of a financial instrument at the end of its term, including the principal and any accumulated interest or dividends.

Compounded Semi-annually

A method of calculating interest where the interest is added to the principal twice a year.

Strip Bond

A type of bond investment where the coupon payments and the principal are separated and sold individually as zero-coupon instruments.