1. For a given exercise price, all else being equal (ceterus paribus), the higher the stock price, the greater the potential intrinsic value of a call option.

True

False

2.

The Black-Scholes (and Black-Scholes-Merton) formula assumes that the risk-free rate and volatility levels of the underlying stock will remain constant until the expiration date.

True

False

3.

1. Which of the following is NOT set by Futures Exchanges with respects to the contracts traded on their exchanges?

   		Date(s) the contract expires
   		Quality of the item to be delivered
   		Denominational value (i.e., how large a quantity of an item will be included in a single contract (e.g., 500 ounces of silver).
   		Method of delivery of the underlying asset.
   		All of the above are set by exchanges on contracts traded on their exchanges.