Buying a Call Option (Standing Ready to Buy Bonds at the Exercise

question 60

True/False

Buying a call option (standing ready to buy bonds at the exercise price) is a strategy that a FI may take when bond prices rise and interest rates are expected to fall.

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Definitions:

Gambling Instinct

An inclination or propensity to take risks in the hope of gaining something, commonly observed in gambling contexts.

Nature

The phenomena of the physical world collectively, including plants, animals, the landscape, and other features and products of the earth.

Nurture

The influence of external factors after conception, e.g., the product of exposure, experience, and learning on an individual.

Instinct

An ingrained behavior observed in animals that consistently occurs in reaction to designated stimuli.