A short hedger is long asset & short futures. Basically he is earning the difference spot-futures. Basis is spot-futures. If basis increases, spot-futures increases. So, his position improves.
The basis of a futures contract strengthens unexpectedly. Which one of the following statements is true?...
2. The basis is defined as spot minus futures. For a short hedger basis strengthens unexpectedly. Which of the following is true (a) The hedger's position improves. (b) The hedger's position worsens. (d) The hedger's position stays the same.
On 1 January you sold one March maturity S&P/ASX 200 index futures contract at a futures price of 700. If the futures price is 800 on 1 February, what is your profit? The contract multiplier is $25. In other words, the contract calls for delivery of $25 times the value of index. 1 index point move translates into a $25 change in the value of the contract. a. $100 b. -$100 c. $700 d. $2,500 e. -$2,500 Which one of...
1.Which of the following is not the reason for Basic risk of hedging using futures? a. The asset whose price is to be hedge may not be exactly the same as the underlying asset of the futures contract b. The asset whose price is to be hedge may not be exactly the same as the price of the futures contract c. The hedger may not be certain of the exact date the asset will be bought or sold d. The...
Which of the following is true about the futures contract? i. they trade in the over the counter market ii. they are settled daily iii. they are subject to default risk iv. a margin deposit is required for both long and short positions v. a contract specifies a range of delivery dates (rather than a single date) Choices: multiple of the choice might be correct
Determine which of the following statements are True (T) and which are False (not true) (F). a. _____ Macaulay Duration and term are inversely related. b. _____ Bachelier was a partner of LTCM. c. _____ Put-Call Parity states that . d. _____ One can purchase stock by being assigned when short a put option. e. ______ The Gamma of calls is positive and of puts is negative. f. ______ In polling a greater confidence level results in a more accurate...
12. Which of the following statements about derivatives is true A) American type options can be exercised only at a specific date B) Short position in gold futures turns out to be profitable if the gold price goes down C) Forward contracts are traded in derivatives exchange D) None of the above is true
The initial margin requirement of an interest rate futures contract is 12% with a price of $149,841. The futures is worth $125,000 per contract. The percentage profit/loss of the investor with a short position of this futures will be _________ if the futures price becomes $145,000. Multiple Choice A.37.92% loss B. 37.92% profit C. 26.92% profit D. 26.92% loss
You have \(\$ 100,000\) to invest today. You are bullish about the stock market and you think that the S\&P 500 index is going up. You want to leverage your investment by taking a long position in S\&P 500 index futures.Micro E-mini S\&P 500 Futures contractThere is a new futures contract on the S\&P 500 index with a lower contract multiplier-only 5 times the index. You are using this contract to implement your strategy. You chose the contract expiring on...
Which of the following statements is most accurate?Briefly explain A. Futures contracts could be private transactions. B. Forward contracts marked to market daily are futures contracts. C. A Forward contract could have the same liquidity as a Futures contracts. D. Futures contracts require that both parties to the transaction have a high degree of creditworthiness.
QUESTION 117 Which of the following regarding futures contracts is least accurate? a. Futures contracts are less liquid than forward contracts. b. Futures contracts are marked-to-market. c. Futures contracts are traded on a regulated exchange. d. Futures contracts allow more delivery options than forward contracts. QUESTION 118 A long position in a futures contract expiring in November can be offset by: a. Selling a future contract expiring in November. b. Selling a future contract expiring anytime between September and December....