金融英语刘文国第二版课后练习Exercises 14.docVIP

Exercises 14 Ⅰ. Answer the following in English Why use Options? There are two main reasons why an investor would use options: to speculate and to hedge. What are options? An option is a contract giving the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. How many types of options? There are two main types of options (American options and European options). What is a call option? A call option gives the holder the right to buy an asset at a certain price within a specific period of time. Calls are similar to having a long position on a stock. Buyers of calls hope that the stock will increase substantially before the option expires. What is a put option? A put gives the holder the right to sell an asset at a certain price within a specific period of time. Puts are very similar to having a short position on a stock. Buyers of puts hope that the price of the stock will fall before the option expires. What is the function of stock option? Many companies use stock options as a way to attract and to keep talented employees, especially management. They are similar to regular stock options in that the holder has the right but not the obligation to purchase company stock. What is an option’s premium? An options premium is its intrinsic value + time value. What is advantage of options? The advantage of options is that you arent limited to making a profit only when the market goes up. Ⅱ. Fill in the each blank with an appropriate word or expression An option is a contract between a buyer and a seller that gives the buyer the right—but not the obligation—to buy or to sell a particular asset (the underlying asset) at a later day at an agreed price. A call gives the holder the right to buy an asset at a certain price within a specific period of time. Calls are similar to having a long position on a stock. Buyers of calls hope that the stock will increase substantially before the option expires. A put g