1. Which of the following is a primary market transaction?
a) You sell 200 shares of IBM stock on the NYSE through your broker.
b) You buy 200 shares of IBM stock from your brother. The trade is not made through a broker-you just give him cash and he gives you the stock.
c) IBM issues 2,000,000 shares of new stock and sells them to the public.
d) One financial institution buys 200,000 shares of IBM stock from another institution. An investment banker arranges the transaction.
e) IBM sells 2,000,000 to its employees when they exercise options granted in prior years.
2. A U.S. firm expects receivables of €125,000 in three months. The U.S. firm purchases a put option on the euros. The strike price is $1.27/€ and the premium is $.05/€. What is the total dollar amount received from the euro receivable if the spot rate in three months is (Multiply any $/€ amount by €125,000)
$1.18/€
$1.25/€
$1.30/€
$1.41/€