Question

Question31 Which of the following is a disadvantage of using standardized financial contracts as a risk management tool? they are typically cheaper to enter into, since they are standardized they are typically more expensive than customized contracts they are typically more liquid, and thus provide the potential to sell out of the position. their specifications may not provide a good match to the actual risk exposure being hedged. none of the above, i.e. all of the above are either advantages or totally irrelevant to this question QUESTION 32 Fill in the blanks: Sales managers would generally prefer a current asset investment strategy. Financial managers would generally prefer a current asset investment strategy relaxed, restrictive (respectively) restrictive, relaxed relaxed, relaxed restrictive, restrictive QUESTION 33 Which of the following assets' book values would, in general, most accurately represent the assets' true market value? specialized inventory that can only be used for specific projects real estate assets of the firm Inventory that is widely used in many common manufacturing activities equipment assets of the firm used in production activities QUESTION 34 The owner of which of the following financial contracts has a right to act, but not an obligation to act? option contract forward contract futures contract swap contract none of the above, I.e. they ALL impose obligations on the owner to act. QUESTION 35 All of the following are commonly considered as derivatives, except which one? option contract stock contract bond contract forward contract both b&c QUESTION 36

Answer 1

31- they are typically more expensive than customized one.( this a false statement). other statements are advantages. thus answer is the last option given

32- relaxed, rstrictive (respectively)

33- inventory that is widely used in many common manufacturing activities

34-option contract ( options contract is a type of derivative contract which gives the buyer/holder of the contract the right (but not the obligation) to buy/sell the underlying asset at a predetermined price within or at the end of a specified period.)

35- both b and c ( derivatives- futures forwards options swaps)