Risk Latte - Quiz # 8

In 1994, Bankers Trust issued a new kind of put warrants on TSE 35 index. To buy the warrant the investor was required to pay $2.50 on the purchase date and a year later the investor may chose to pay another $2.50 to receive an American put option on the TSE 35 index. Which one of the following regarding this product was TRUE:

a) the product marked the advent of Installment Warrants;
b) the product appealed to investors who liked the idea of leverage;
c) the product was a great success amongst retail investors;
d) All the above;

Which of the following statements regarding Sudden Birth and Death financial options is TRUE:

a) There is no such thing as a Sudden Birth and Death option;
b) These have been widely used in Insurance industry;
c) These options have come into existence after the market crash of 2008;
d) These options have no volatility input in their pricing model;

Which of the following payoff defines a floating strike Lookback Call option?

a) max(0,S_T - S_min)
b) max(0,S_max - S_T)
c) max(0, max(S_max,S_min) - S_T)
d) None of the above

A Shout option is a:

a) hybrid of Lookback and Average option;
b) hybrid of Lookback, Ratchet and Ladder option;
c) hybrid of Barrier and Lookback option;
d) None of the above;

If there are four assets S₁,S₁, and S₃ and four corresponding strike prices, K₁ ,K₂ ,K₃ and an arbitrary strike K, and if T is the maturity of the option then the payoff of a Madonna call option would be given by:

c) There is no such thing as a Madonna option
d) None of the above;

A Money back option is a variation of:

a) compound option
b) contingent premium option
c) compo option
d) barrier option

Who is the odd man out amongst the following:

a) Fischer Black
b) Mark Rubenstein
c) Louis Bachelier
d) Bruno Dupire

Which one of the following financial products is the odd one out:

a) In January 1988 AB Svensk Exportkredit, a Swedishcorporation,issued
          average exchange rate options on the Japanese Yen and the Deutsche
          Mark against the Dollar, where the average was taken over the first fixings
          over all trading days in a year;
b) In May 1985 the Dutch company Oranje Nassau issued 8-year bonds
          in local currency where the redemption value was defined as the
          maximum of the average price of 10.5 barrels of Brent Blend oil over the
          last year of the contract and the face value of the bond;
c) In 1977 one of the first commodity linked bonds known as the Mexican
           Petrobond, was issued featuring redemption at 25 day interval averages;
d) In 1991 the CBOE introduced a new type of option on the OEX and SPX
          indices called a CAP where am ATM CAP call is issued with a cap level
          was set 30 index points above the strike level;

The right but not the obligation to pay the fixed rate and receive the floating rate in an Interest Rate swap is called a:

a) Receiver Swaption
b) Payer Swaption
c) Digital Swaption
d) None of the above;

A Variable Purchase Option (VPO) is basically:

a) a call option on two different amounts of two different stocks within the
          same industry which are about to get merged:
b) a call option on a single stock where the number of underlying shares is
          a deterministic function of the asset price;
c) a call option on a single stock where the number of underlying shares is
          a function of the average of the last five days asset price;
d) a call option on a single stock where both the number of underlying
          shares and the strike price of the option are functions of asset price;