18.A(n) can be exercised on the expiration date only,whereas a(n) can be exercised at any time up to and including the expiration date. (a)American-type option;European-type option (b)European-type option;American-type option (c)European-type option;Asian-type option (d)American-type option;Asian-type option Answer:(b) 19.You are the Chief Financial Officer of a soybean oil company.In your job you receive dozens of different proposals each month regarding ways to hedge the company's exposure to falling soybean oil prices.How do you decide among the different proposals? (a)Choose the hedge with the best investment bank participating. (b)Choose the hedge that achieves the desired reduction in risk through the best insurance policy. (c)Choose the hedge that minimizes the cost of achieving the desired reduction in risk. (d)none of the above Answer:(c) 20.Which of the following are ways to avoid losses through insuring? (a)Lock in a fifteen hundred dollar fare for a holiday airfare. (b)Agree to purchase an apartment in six months for three hundred thousand dollars. (c)As a soybean grower,enter into a forward contract to sell your soybeans at a fixed price in a month. (d)none of the above Answer:(d) 21.Which of the following are ways to avoid losses through hedging? (a)Pay a premium for healthcare coverage. (b)Purchase a put option on a stock you do own. (c)Pay for a credit guarantee on a loan you are worried about collecting. (d)Enter into a swap to exchange a series of cash flows at specified intervals over a specified period of time. Answer:(d) 11-511-5 18. A(n) ________ can be exercised on the expiration date only, whereas a(n) ________ can be exercised at any time up to and including the expiration date. (a) American-type option; European-type option (b) European-type option; American-type option (c) European-type option; Asian-type option (d) American-type option; Asian-type option Answer: (b) 19. You are the Chief Financial Officer of a soybean oil company. In your job you receive dozens of different proposals each month regarding ways to hedge the company’s exposure to falling soybean oil prices. How do you decide among the different proposals? (a) Choose the hedge with the best investment bank participating. (b) Choose the hedge that achieves the desired reduction in risk through the best insurance policy. (c) Choose the hedge that minimizes the cost of achieving the desired reduction in risk. (d) none of the above Answer: (c) 20. Which of the following are ways to avoid losses through insuring? (a) Lock in a fifteen hundred dollar fare for a holiday airfare. (b) Agree to purchase an apartment in six months for three hundred thousand dollars. (c) As a soybean grower, enter into a forward contract to sell your soybeans at a fixed price in a month. (d) none of the above Answer: (d) 21. Which of the following are ways to avoid losses through hedging? (a) Pay a premium for healthcare coverage. (b) Purchase a put option on a stock you do own. (c) Pay for a credit guarantee on a loan you are worried about collecting. (d) Enter into a swap to exchange a series of cash flows at specified intervals over a specified period of time. Answer: (d)