22. The term thin market\" refers to: a. a market for a product not grown in the

Question

22. The term thin market" refers to: a. a market for a product not grown in the U.S b. a market for a product with substantial production risk. c. a market with only a small proportion of all transactions are publically reported. d. a market with very little price risk. 23. Technical Price Analysis; a. Is useful in long-term price projections, b. Analyzes factors affecting supply and demand. c. Utilizes various charts, indexes, and trends in price movement to predict market prices. d. Is more accurate forecasting method than fundamental analysis. 24. An option premium's time value a. is determined by when it is purchased during the trading da b. is determined by underlying futures price volatility and time to expiration. c. never changes during the life of an option. d. All of the above. 25. An option premium's intrinsic value a. determines if it is in-the-money or out-of-the-money b. is determined by the relationship between the strike price and the underlying futures price. c. is positive for a put" if the strike price is above the futures price. d. all of the above. 26. A lean hog "cal" option is defined as: a. is the right to sell a lean hog futures contract at a specified price within a given time period. b. is the right to buy lean hogs in the cash market at a given strike price c. is the right to buy a lean hog futures contract at a specified price within a given time period. d. all of the above. 27. A long hedge is offset by a. Buying the commodity in cash market. b. Selling the commodity in cash market. c. Selling the futures contract & buying the commodity in the cash market simultancously d. Buying the futures contract& selling the commodity in the cash market simultaneously

Explanation / Answer

22 .

Answer : [c] market with only a small proportion of all transactions which are publically reported.

Justification : Thin market is basically defined as a market where trading volume is low and on other side side it has huge offers and bids for the stocks.
It has less stock to buy and sell.

23

Answer [a]: is useful in long-term price projections

Justification : Technical analysis helps in predicting the price directions with the help of past market static and situations(Price and volume of stocks traded)

24

Answer : [b] is determined by underlying future price volatility and time of expiration.

25

Answer : [b] is determined by the relationship between the strike price and the underlying future price.

Justification for 24 & 25 : In options world the main component that makes options's price is its intrinsic value nothing but its underlying security's predicted value.

Intrinsic value - Option price = TV(Time Value)

Example if a firm abc is trading for $20 and abc 15 call option is trading at $8 then intrinsic value is 5($20 - $15) and time value is $3($8-$5)

26

Answer [c] : is the right to buy a lean hog futures contract at a specified price within a given period of time.

Justification : call options are basically the contracts that give the privilege to the owner the right to buy an underlying asset in future at a mutual agreed price.
We can also buy a call if we presume that price of underlying asset would increase in future over a period of time.

27

Answer [d] Selling the future contracts & buying the commodity in cash market simultaneously  

Justification : Offsett is done by obtaining a balanced opposite future contract by selling out the current future contract.

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