Finance Final Exam With 100% Verified Correct Answers

The long payoff option is always... {Ans: positive. A long position this is a limited liability transaction. Unlike forward-based derivatives you cannot lose more than your premium outlay.}How is bitcoin mined? {Ans: Miners generate new bitcoins whenever they solve a cryptographic puzzle. The (block) reward for solving the puzzle is dictated by the bitcoin protocal}OS IBC and Trust Combination structure implications {Ans: In this structure the holding company is replaced by a family trust called asset protection trust (APT) -the APT provides insulation for the sector or family}Delta and Moneyness (When ATM, ITM and OTM) {Ans: -When calls and put Delta = 50 --> ATM (Extrinsic) -When calls and puts have a delta that is greater than 50 ITM (Intrinsic + Extrinsic) -When calls and puts have a delta that is less than 50 ---> OTM (Extrinsic)}Because future payoffs of derivatives are determined by future prices of underlying securities, we can derive relationships between the current prices of the derivative and underlying securities based on... {Ans: no-arbitrage arguments}The Archegos Capital Scandal {Ans: A family named Archegos Capital Management defaulted on margin call, leading to large losses for several banks}Derivatives are great devices to.... (4)