1. The Option Pricing Model was developed by ________________.

a. Miller and Modigliani

b. Martin and Lewis

c. Black and Scholes

d. Ben and Jerry

2. _______________ risks have the potential for gains or losses.

a) Financial

b) Insurable

c) Pure

d) Speculative

3. Hedging activities and buying insurance are examples of _______________.

a) Risk Avoidance

b) Risk Reduction

c) Risk Retention

d) Risk Transfer

4. Executive stock options have all of these advantages except ____________.

a) Align managers with shareholders

b) Discourage risk taking

c) Higher reported incomes on the income statement

d) Retains good managers