[According to the PRMIA study guide for Exam 1, Simple Exotics and Convertible Bonds have been excluded from the syllabus. You may choose to ignore this question. It appears here solely because the Handbook continues to have these chapters.]
Which of the following statements are true for a contingent premium option:
I. They are also called 'pay-later' options
II. Premiums are due only if the option expires in the money
III. They are a combination of a vanilla option and an appropriate number of cash-or-nothing options
IV. They are preferred because the premiums are always less than those on equivalent vanilla options
Submit