1. Calculate the payoff at expiration for a call holder on an option on an underlying Eurodollar LIBOR rate for a 180-day time deposit if the annual rate at expiration is 6.50 %. The exercise rate is 6.0 %, the notional principal is $10,000,000, the option it is settled in cash but not at expiration as FRAs but at the end of the period covered by the time deposit.
a - $0
b -$25,000
c -$27,500
d -$28,750
e -$30,000
2. A stock dividend will decrease stock prices similar to stock splits on the day of the split.
True or false
3. The idea that regulation primarily benefits regulators and/or government is called _______.
a) Public Choice
b) Public Interest
c) Regulatory Capture
d) Regulatory Dialectic