For a call option, the (a)_____ value is the difference between the current stock price and the options strike price and the (b) _______ is the difference between the options market price and its exercise value. A riskless hedge is a hedge in which an investor buys a stock and simultaneously sells a call option on that stock and ends up with a riskless position. The Binomial Option Pricing Model is an option pricing model based on a riskless hedge with two scenarios for the value of the underlying asset. The Black-Scholes Option Pricing Model (OPM) is derived from the concept of a riskless hedge and calculates the value of an option as the difference between the expected PV of the terminal stock price and the PV of the exercise price. (c) _______ contracts are contracts under which one party agrees to buy a commodity at a specific price on a specific future date and the other party agrees to make the sale.

a)

1) Market

2) Premium

3) Margin

4) exercise

b)

1) Market

2) Premium

3) Margin

4) exercise

c)

1) swap

2) futures

3) hedging

4) forward