in options trading, margin must be posted by______

Graphically show a covered call options strategy, including payoff. Explain why an investor mayuse this option strategy.

The return payable on equity is called Select one: a. Brokerage b. Interest c. None of the options d. Commission e. Discount

Explain each of the following: a. expected default frequency b. market implied rating c. distance-to-default index measure

Why are the probabilities of stock price movements not used in the binomial model for calculating an option’s price? Explain in detail.

Briefly explain the mechanics of adjustable rate and market auctionpreferred stock.

Define each of the following terms:a. Derivative; natural hedgeb. Option; call option; put optionc. Long-term Equity Anticipation Security (LEAPS)d. Exercise value; strike (exercise) pricee. Binomial Option Pricing Model; Black–Scholes Option Pricing Model; riskless hedgef. Futures contract; forward contractg. Commodity futures; financial futuresh. Swap; structured notei. Inverse floaterj. Risk managementk. Speculationl. Hedging; long hedges; short hedges; perfect hedge

4. Answer the following questions on exotic options: (a) Discuss the differences between a combination and a spread when constructing portfolios of options. (b) Define a long strangle and represent the profit function. (c) Design a forward contract on a stock with a particular delivery price and delivery date as a combination of options on the same underlying asset.

If interest rate and stock price move in the same direction, then a futures price implied from spot-futures parity favors

The below question is related to the "Financial Derivatives and Risk Management". Describe the five variables like Stock Price, Exercise Price, Risk-Free Rate, Volatility or Standard Deviation, and Time to Expiration that the Black-Scholes-Merton Formula uses to calculate the price of call and put options. Provide an adequate assumptions to support your explanations.