Which of the following are methods to hedge economic exposure? Select one: Futures contracts Options contracts...
Which of the following are methods to hedge economic exposure? Select one: Futures contracts Options contracts Balancing revenues and expenses More than one of the above
Homework Answers
A futures contract is an agreement to buy or sell a asset, security or commodity at a predetermined price at a specified time in the future.
An options contract is an agreement between a buyer and seller that gives the purchaser of the option the right to buy or sell a particular asset at a later date at an agreed upon price.
Both of these are used to hedge economic exposure.
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Which of the following are methods to hedge economic exposure?
Select one: Futures contracts Options contracts...
22. Which type of hedge would a wheat farmer select? A. A long hedge-buy wheat futures...
22. Which type of hedge would a wheat farmer select? A. A long hedge-buy wheat futures contracts as a hedge against a decline in the price of wheat B. A short hedge-sell wheat futures contracts as a hedge against a decline in the price of wheat C. A short hedge-sell wheat futures contracts as a hedge against an increase in the price of wheat D. A long hedge-buy wheat futures contracts as a hedge against an increase in the price...
A U.S. corporation is considering using currency options and currency futures contracts. Explain to this corporation...
A U.S. corporation is considering using currency options and currency futures contracts. Explain to this corporation the advantages and disadvantages of each contract to hedge its exposure in Mexican pesos. Which derivative contract should the corporation use to hedge projects that are anticipated but not committed?
QUESTION 117 Which of the following regarding futures contracts is least accurate? a. Futures contracts are...
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....
The derivatives markets contain different types of contracts. Forward contracts, futures contracts, options, and swaps are...
The derivatives markets contain different types of contracts. Forward contracts, futures contracts, options, and swaps are some common types of derivatives contracts. True or False: One of the major differences between futures and forward contracts is that forward contracts are revalued and marked-to-market daily, whereas futures contracts are traded on an organized exchange. O False True Which of the following are used to hedge against fluctuating interest rates, stock prices, and exchange rates? Commodity futures Financial futures O Ahmad feels...
Managing short-term transaction exposure with currency futures contracts is different from managing it with currency options...
Managing short-term transaction exposure with currency futures contracts is different from managing it with currency options because currency futures will give you upside gains but immunize against losses currency options will give you upside gains but immunize against losses currency forwards require you to mark to market the daily gains or losses
2. You must select a futures contract with which to hedge a portfolio. The six available...
2. You must select a futures contract with which to hedge a portfolio. The six available contracts all have the same variability, but their respective correlations with your portfolio are: -0.85, -0.25, 0, 0.50, 0.75, and 0.95. Rank these six contracts with respect to basis risk , from highest to lowest basis risk.
Which Pair of these Currency Hedge methods is most customizable as to amount and transaction date?...
Which Pair of these Currency Hedge methods is most customizable as to amount and transaction date? A-Options and forwards B-Forwards and money market C-Options and Futures D-Options and money market E-Forwards and Futures
Which of the following statements is least accurate?Briefly explain A. Futures contracts are generally more liquid...
Which of the following statements is least accurate?Briefly explain A. Futures contracts are generally more liquid than forward contracts. B. Forward contracts cannot be offset unlike futures contracts. C. Forward contracts are easier to tailor to specific needs than futures contracts. D. Futures contracts are characterized by having a clearinghouse as an intermediary.
Which of the following arrangements is a zero-sum game? 1. Futures contracts II. Options contracts III....
Which of the following arrangements is a zero-sum game? 1. Futures contracts II. Options contracts III. Forward contracts a) I only b) II only c) I and II only d) III only e) I, II, and III Which of the following defensive tactic(s) to resist a merger could induce a firm to repurchase its own shares? O A) Poison pill B) Golden parachutes C) Exclusionary self-tender D) Standstill agreement E) C and D
Which of the following are cash settled All futures contracts All option contracts Futures on stook...
Which of the following are cash settled All futures contracts All option contracts Futures on stook indices Futures on commodities
22. Which type of hedge would a wheat farmer select? A. A long hedge-buy wheat futures contracts as a hedge against a decline in the price of wheat B. A short hedge-sell wheat futures contracts as a hedge against a decline in the price of wheat C. A short hedge-sell wheat futures contracts as a hedge against an increase in the price of wheat D. A long hedge-buy wheat futures contracts as a hedge against an increase in the price...
The derivatives markets contain different types of contracts. Forward contracts, futures contracts, options, and swaps are some common types of derivatives contracts. True or False: One of the major differences between futures and forward contracts is that forward contracts are revalued and marked-to-market daily, whereas futures contracts are traded on an organized exchange. O False True Which of the following are used to hedge against fluctuating interest rates, stock prices, and exchange rates? Commodity futures Financial futures O Ahmad feels...
Which of the following arrangements is a zero-sum game? 1. Futures contracts II. Options contracts III. Forward contracts a) I only b) II only c) I and II only d) III only e) I, II, and III Which of the following defensive tactic(s) to resist a merger could induce a firm to repurchase its own shares? O A) Poison pill B) Golden parachutes C) Exclusionary self-tender D) Standstill agreement E) C and D
Which of the following are cash settled All futures contracts All option contracts Futures on stook indices Futures on commodities
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