Option value equal to the market value of convertible bond

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1. Futures differ from options in all of the following ways EXCEPT:

A) The future buyer has the obligation to buy the commodity at the specified price and at the specified time.

B) Futures contracts require the delivery of an asset at the settlement date (or offsetting transaction); options may be exercised at any time up to the expiration date, or they may expire unexercised.

C) Future contracts can be both on margin, while options cannot.

D) The option buyer has the obligation to buy the security at the specified price and at the specified time.

2. A convertible bond has an option value equal to the market value of the convertible bond minus the:

maximum of the straight bond value or conversion value.

conversion value.

conversion premium.

minimum of the conversion value or the straight bond value.

straight bond value.

Reference no: EM131860790

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