Question

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 strongly that the 20-year US Treasury bond yield is too low. Which of the following derivative positions would let him earn a profit if he turns out to be right? O Along position in structured notes O Along position in interest rate futures O A short position in interest rate futures O A short position in structured notes Forward and futures currency contracts reflect an obligation to either buy or sell currency at a future date, whereas options are contracts traded between buyers and sellers that give the option holder the right, but not the obligation, to buy or sell a specific (underlying) asset at a specific price, called the exercise or strike price, on or before an expiration date. gives the option holder the right to buy an asset at a fixed price during a particular period. A put option A call option

Answer 1

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. False True forward contracts are not marked to market daily, instead they are settled on the maturity date. O

Which of the following are used to hedge against fluctuating interest rates, stock prices, and exchange rates? Commodity futures Financial futures (factual)

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