Whose payoff is determined by the value of another asset

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Reference no: EM132037966

True or False

a) As the volatility of a stock increases, the price of an option on that security increases.

b) A derivative is a security whose payoff is determined by the value of another asset.

c) The quantity d2 in Black-Scholes, when computing the price of a call, is the probability of the option expiring in the money

d) Futures reduce counterparty risk through daily margin calculations and payment

e) In a mortgage backed security (MBS), the AA tranche receives payments before the AAA tranche \

f) CDS Credit Default Swaps are activated after a credit event for the reference entity.

g) You would use a long straddle option strategy if you expected the underlying security to either increase or decrease in value more than a small amount from its existing price.

h) I will love the Geometric Brownian Motion equation above all other equations, forever.

i) A swap is the agreement to exchange cash flows with specified dates and formulas.

Reference no: EM132037966

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