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:

Pentane

A hydrocarbon with the formula C5H12, consisting of five carbon atoms linked together in a straight chain.

Condensed Structural Formula

A method of representing the molecular structure of a compound in a simplified manner, showing how atoms are bonded without detailing the actual bond locations.

Resonance Structures

Different Lewis structures for the same molecule that depict the delocalization of electrons within the molecule.

Major Contributor

In resonance theory, refers to the resonance structure that makes the largest contribution to the overall hybrid structure based on stability.