Which of the Following Is True

question 13

Multiple Choice

Which of the following is true

• A) A variance swap is worth the square of a volatility swap
• B) The payments on a variance swap are the square of the payments on a volatility swap
• C) Variance swaps can be valued in terms of European call and put options.
• D) None of the above

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Definitions:

Tax-Oriented Lease

This is a leasing arrangement in which the lessor retains ownership of the asset and enjoys tax advantages, such as deductions for depreciation, while the lessee benefits from using the asset.

Third-Party Lease

A contractual agreement where an outside party becomes the lessor, leasing assets or property to the primary party, commonly utilized in equipment and property rentals.

Independent Leasing Company

A business that provides leasing services without being affiliated with any single manufacturer or seller, allowing for a wide range of asset leasing options.

Captive Financial Lease

A leasing arrangement where the lessor is owned by or closely affiliated with the company that manufactures or sells the leased asset, often used to finance purchases from the parent company.