Homework Answers
1.
Buying a stock of a company , signifies that ownership has been taken
Selling a stock of a company, signifies that ownership has been given
Future Contracts are the derivative used for trading, which does not give the ownership right
Answer is C
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1. Which of the following trades implies that ownership has been taken? a. Buying a futures...
3. Assume the commodity whi contract. As sec contract) are 90, 9. You initiated a short...
3. Assume the commodity whi contract. As sec contract) are 90, 9. You initiated a short futures position at a price of 100 before leaving for school. Now you must be at school to take this exam so you can not monitor the progress of your position. What order could you place with your broker just before taking this exam to unwind your position if prices moved 10 points in your favor? a. Buy limit 90 b. Buy stop 90...
A contract’s volume on a given day was 500. If this contract trades in accordance with...
A contract’s volume on a given day was 500. If this
contract trades in accordance with the concept of (pure) normal
backwardation then what positions would definitely notoccur on that
day?
Please show steps!
12. A contract's volume on a given day was 500. If this contract trades in accordance with the concept of (pure) normal backwardation. then what positions would definitely not occur on that day? a. a hedger who goes long 0 contracts, a speculator who goes long...
A contract's volume on a given day was 500. If this contract trades in accordance with...
A contract's volume on a given day was 500. If this contract trades in accordance with the concept of (pure) normal backwardation, then what positions would definitely not occur on that day? a. A hedger who goes long 0 contracts, a speculator who goes long 500 contracts b. A hedger who goes short 500 contracts, a speculator who goes long 500 contracts c. A hedger who goes long 0 contracts, a hedger who goes short 500 contracts d. A speculator...
13. Assume there are only three possible outcomes for the sp commodity which underlies a futures...
13. Assume there are only three possible outcomes for the sp commodity which underlies a futures contract a contract. As seen today, these prices (i.e. those at the maturi contract) are 90, 100 or 110 and each may occur with probabin ossible outcomes for the spot price of a underlies a futures contract at the maturity of that futures se prices (i.e. those at the maturity of the futures ach may occur with probability 1/3, 1/3 and 1/3. sume that...
sume there are only three possible outcomes for the spot price of a commodity which underlies...
sume there are only three possible outcomes for the spot price of a commodity which underlies a futures contract at the maturity of that futures contract. As seen today, these prices (i.e. those at the maturity of the futures contract) are 90, 100 or 110 and each may occur with probability 1/3, 1/3 and 1/3. Further, assume that futures market prices are set in accordance with the theory of (normal) contango. Which of the following is a potential price that...
e following trades implies that ownership has been taken? 1. Which of the following trades im...
e following trades implies that ownership has been taken? 1. Which of the following trades im a. Buying a futures contract. b. Selling a futures contract. c. Buying a stock. d. Shorting a stock. e. None of the above implies ownership.
The futures price of gold is $1,000. Futures contracts are for 100 ounces of gold, and...
The futures price of gold is $1,000. Futures contracts are for 100 ounces of gold, and the margin requirement is $3,000 a contract. The maintenance market requirement is $1,500. A speculator expects the price of gold to rise and enters into a contract to buy gold. a. How much must the speculator initially remit? b. If the futures price of gold rises to $1,005, what is the profit and return on the position? c. If the futures price of gold...
10. What should a trader do when the one-year forward price of an asset is too low? Assume that the asset provides...
10. What should a trader do when the one-year forward price of an asset is too low? Assume that the asset provides no income. A. The trader should borrow the price of the asset, buy one unit of the asset and enter into a short forward contract to sell the asset in one year. B. The trader should borrow the price of the asset, buy one unit of the asset and enter into a long forward contract to buy the...
1.Which of the following is not the reason for Basic risk of hedging using futures? a....
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...
: Since the 1930's commercial banks have NOT been permitted to do any type of securities...
: Since the 1930's commercial banks have NOT been permitted to do any type of securities underwriting. True False : With regards to a futures contract, the SHORT position will make money when the underlying item's price RISES. True False : If interest rates rise, the value of Master Limited Partnership (MLP) units will rise. True False : Basis risk is the risk to an investor arising from the uncertainty about the basis at a given future date. It is...
3. Assume the commodity whi contract. As sec contract) are 90, 9. You initiated a short futures position at a price of 100 before leaving for school. Now you must be at school to take this exam so you can not monitor the progress of your position. What order could you place with your broker just before taking this exam to unwind your position if prices moved 10 points in your favor? a. Buy limit 90 b. Buy stop 90...
A contract’s volume on a given day was 500. If this
contract trades in accordance with the concept of (pure) normal
backwardation then what positions would definitely notoccur on that
day?
Please show steps!
12. A contract's volume on a given day was 500. If this contract trades in accordance with the concept of (pure) normal backwardation. then what positions would definitely not occur on that day? a. a hedger who goes long 0 contracts, a speculator who goes long...
13. Assume there are only three possible outcomes for the sp commodity which underlies a futures contract a contract. As seen today, these prices (i.e. those at the maturi contract) are 90, 100 or 110 and each may occur with probabin ossible outcomes for the spot price of a underlies a futures contract at the maturity of that futures se prices (i.e. those at the maturity of the futures ach may occur with probability 1/3, 1/3 and 1/3. sume that...
sume there are only three possible outcomes for the spot price of a commodity which underlies a futures contract at the maturity of that futures contract. As seen today, these prices (i.e. those at the maturity of the futures contract) are 90, 100 or 110 and each may occur with probability 1/3, 1/3 and 1/3. Further, assume that futures market prices are set in accordance with the theory of (normal) contango. Which of the following is a potential price that...
e following trades implies that ownership has been taken? 1. Which of the following trades im a. Buying a futures contract. b. Selling a futures contract. c. Buying a stock. d. Shorting a stock. e. None of the above implies ownership.
10. What should a trader do when the one-year forward price of an asset is too low? Assume that the asset provides no income. A. The trader should borrow the price of the asset, buy one unit of the asset and enter into a short forward contract to sell the asset in one year. B. The trader should borrow the price of the asset, buy one unit of the asset and enter into a long forward contract to buy the...
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