Assume a Bank Has Bought a Call Option on Bonds

question 38

Multiple Choice

Assume a bank has bought a call option on bonds with a notional value of $200.Further assume that and that the delta of the option is calculated at 0.45.What is the contingent asset value (round to two decimals) ?

• A)$200 / 0.45 = $444.44
• B)$200 * 0.45 = $90.00
• C)($200 / 0.45) / 100 = $4.44
• D)($200 * 0.45) / 100 = $0.90

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Definitions:

Limited Partner

An investor in a limited partnership who is not involved in daily business operations and whose liability is limited to the amount they invested in the partnership.

General Partners

Individuals who participate in the management of a partnership and have unlimited liability for its debts.

Securities Fraud

A type of serious white-collar crime that involves deceiving investors or manipulating financial markets.

Limited Partnership

A form of partnership consisting of at least one general partner, who manages the business and has unlimited liability, and one or more limited partners, who have limited liability.