1. Options contracts contrast with futures because

A. options are not traded on organized exchanges.

B. options do create an obligation for the owner of the instrument.

C. options are derivatives.

D. None of the above.

2. Which of the following characteristics are drawbacks of convertible bonds?

A. downside protection is ineffectual if the bond is bought at a large premium over par value.

B. interest rates on the debt-instrument part of a convertible bond are frequently below

market interest rates.

C. conversion may be forced on the bondholder by call provisions on the convertible bond.

D. all of the above are drawbacks of convertibles.