25) All of the following are roles of a derivative exchange EXCEPT: _____. A) maintaining margin...
Homework Answers
Forward is traded OTC and not on derivatives exchange. Hence, B)
reducing the default risk on forward contracts
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25)
All of the following are roles of a derivative exchange EXCEPT:
_____.
A)
maintaining margin...
2. Suppose the maintenance margin is $5 and initial margin is $10. A long trader trades...
2. Suppose the maintenance margin is $5 and initial margin is $10. A long trader trades 10 contract in the market. when the Day 2's ending balance is $40/ what should the trader do? a. Do nothing but keep trading in Day 3 b. Deposit extra $10 c. Deposit extra $60 d. deposit extra $100 e. None above 3. Which of the following statement regarding clearing hours in futures market is wrong? a. Clearing house collects margin b. Clearing house...
Which of the following duties is not performed by the clearinghouse A) holding margin deposits b)...
Which of the following duties is not performed by the clearinghouse A) holding margin deposits b) guaranteeing performance of buyer and writer c) maintaining records of transaction d) none of the above What are circuit breakers? a) rules that stop trading when futures are about the expires b)a system that shut down the exchange computer during periods of abnormal price changes c) rules that limit the number of contracts a speculator can hold D) none of the above Despite the...
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 c...
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.
. Which of the following statements is CORRECT? a. One advantage of forward cont...
. Which of the following statements is CORRECT? a. One advantage of forward contracts is that they are default free. b. Futures contracts generally trade on an organized exchange and are marked to market daily. c. Goods are never delivered under forward contracts, but are almost always delivered under futures contracts. d. Forward contracts are for commodities while future contracts are for financial securities. Buying a call and a put with the same strike price is called a _______. Naked...
All of the statements below are not false, except: 1. Changes in interest rates represent a risk for both bor...
All of the statements below are not false, except: 1. Changes in interest rates represent a risk for both borrowers and investors because of diminishing investment prospects and increased cost of borrowing; II. Failure to pay accounts receivable on time by customers may have a significant negative impact on the capital base of a company; III. Companies involved in cross-border trades are subject to FX risks: IV. It is essential for banks to assess the creditworthiness of customers to mitigate...
15.6. [Introductory Derivatives Sample Question 30] Determine which of the following is NOT a distinguishing characteristic...
15.6. [Introductory Derivatives Sample Question 30] Determine which of the following is NOT a distinguishing characteristic of futures contracts, relative to forward contracts. (A) Contracts are settled daily, and marked-to-market. (B) Contracts are more liquid, as one can offset an obligation by taking the opposite position. © Contracts are more customized to suit the buyer's needs. (D) Contracts are structured to minimize the effects of credit risk. (E) Contracts have price limits, beyond which trading may be temporarily halted. 15.7....
Can anyone answer the question and explain it thx alot The following statement is to be...
Can anyone answer the question and explain it thx alot
The following statement is to be used in answering questions 29 and 30. Company X, a low-rated firm, desires a fixed-rate, long-term loan. X presently has access to floating interest rate funds at a margin of 1.25% over LIBOR. Its direct borrowing cost is 11% in the fixed-rate bond market. In contrast, company Y, which prefers a floating-rate loan, has access to fixed-rate funds in the Eurodollar bond market at...
NEW R 3. A Canadian company pays $300,000 consulting fee to a U.S. consulting company in...
NEW R 3. A Canadian company pays $300,000 consulting fee to a U.S. consulting company in San Diego. Which of the following account in the U.S. balance of payment statement will be affected by the cross-border transaction? A) Current account B) Capital account C) Foreign reserve account D) Unilateral payment account 6. Newstar, Inc., based in the U.S., exports products to a German firm and will receive E100,000 in six months. On February 1, the spot rate of the euro...
Financial futures are available to protect against all of the following except: a., interest rate risk,...
Financial futures are available to protect against all of the following except: a., interest rate risk, b., level of equity prices, c., currency swap risk, d., exchange rate risk?
All of the following are investments available through direct investing EXCEPT a savings deposits, certificates of...
All of the following are investments available through direct investing EXCEPT a savings deposits, certificates of deposit, and U.S. savings bonds b money market and hybrid mutual funds c Treasury bills, commercial paper, and eurodollars d option and futures contracts
All of the statements below are not false, except: 1. Changes in interest rates represent a risk for both borrowers and investors because of diminishing investment prospects and increased cost of borrowing; II. Failure to pay accounts receivable on time by customers may have a significant negative impact on the capital base of a company; III. Companies involved in cross-border trades are subject to FX risks: IV. It is essential for banks to assess the creditworthiness of customers to mitigate...
15.6. [Introductory Derivatives Sample Question 30] Determine which of the following is NOT a distinguishing characteristic of futures contracts, relative to forward contracts. (A) Contracts are settled daily, and marked-to-market. (B) Contracts are more liquid, as one can offset an obligation by taking the opposite position. © Contracts are more customized to suit the buyer's needs. (D) Contracts are structured to minimize the effects of credit risk. (E) Contracts have price limits, beyond which trading may be temporarily halted. 15.7....
Can anyone answer the question and explain it thx alot
The following statement is to be used in answering questions 29 and 30. Company X, a low-rated firm, desires a fixed-rate, long-term loan. X presently has access to floating interest rate funds at a margin of 1.25% over LIBOR. Its direct borrowing cost is 11% in the fixed-rate bond market. In contrast, company Y, which prefers a floating-rate loan, has access to fixed-rate funds in the Eurodollar bond market at...
NEW R 3. A Canadian company pays $300,000 consulting fee to a U.S. consulting company in San Diego. Which of the following account in the U.S. balance of payment statement will be affected by the cross-border transaction? A) Current account B) Capital account C) Foreign reserve account D) Unilateral payment account 6. Newstar, Inc., based in the U.S., exports products to a German firm and will receive E100,000 in six months. On February 1, the spot rate of the euro...
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