Post margin under the option clearing corporation rules

Assignment Help Financial Management

Reference no: EM131898033

1. Why is the holder of an option not required to post margin under the Option Clearing Corporation rules?

A. The credit worthiness of the holder covers all potential losses.

B. The holder must post securities instead of margin.

C. The seller pays all costs.

D. Once an option is purchased, no further money is at risk.

2. Lithium, Inc. is considering two mutually exclusive projects, A and B. Project A costs $95,000 and is expected to generate $65,000 in year one and $75,000 in year two. Project B costs $120,000 and is expected to generate $64,000 in year one, $67,000 in year two, $56,000 in year three, and $45,000 in year four. Lithium, Inc.'s required rate of return for these projects is 10%. The profitability index for Project A is: a) 1.27, b) 1.17, c) 1.12, d) 1.22?

Reference no: EM131898033

Questions Cloud

Is the global community prepared for a wmd attack : What is the likelihood that a WMD attack will occur in the future? Who will perpetrate this attack?Is the global community prepared for a WMD attack?

Average return does account holder earn on the account : What average return does the account holder earn on the account? What is the average return if the bank lowers the minimum balance to $400?

Robotic surgery definition - what are the benefits : Prepare a presentation that describes technologies - Robotic Surgery Definition

What is a grand theory : What is a grand theory? Since it may seek to explain all communication behavior in a manner that is universally true, what might it resemble?

Post margin under the option clearing corporation rules : Why is the holder of an option not required to post margin under the Option Clearing Corporation rules?

Determine the probability of drawing a full house : Determine the probability of drawing a "Full House" (three cards of one denomination and two cards of another denomination).

What is the equity after-tax irr : What is the equity before-tax IRR?? What is the equity after-tax IRR?

Probability of landing heads : You toss the coins 6 times. find the probability that you tossed at least 2 heads out of your 6 tosses

Write a reflection paper on independent party : Write a reflection paper. The paper should include your reaction to the arguments in the article, as well as any observations you have about the discussion.

User Account

All Pages