Use the Following Information on 13-Week T-Bill Rate Options to Answer

question 50

Multiple Choice

Use the following information on 13-week T-bill rate options to answer the following question(s) .

-Refer to CBOE.Suppose you want to construct a collar to reduce the cost of the cap by selling a floor.What is the net cost of the least expensive such collar? (Be sure the strike prices on the call and the put are NOT the same!)

• A) $0.10 per contract outflow
• B) $10 per contract outflow
• C) $0.10 per contract inflow
• D) $10 per contract inflow

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Definitions:

Giffin Good

A type of good for which demand increases as the price increases, contrary to the basic laws of demand in economics.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded at those prices.

Substitution Effect

The shift in buying habits caused by alterations in the comparative costs of products, resulting in consumers substituting higher-priced items with those that are more affordable.

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Energy-efficient lighting devices that use light-emitting diodes to produce light, known for having a longer lifespan and lower energy consumption compared to traditional bulbs.