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.