Why do short positions require margin? a) Due to the credit risk of short-sellers b) Due...
Why do short positions require margin?
a) Due to the credit risk of short-sellers b) Due to the fact that the risk factors in short positions are greater than long positions c) Short positions are usually volatile d) All of the above
Homework Answers
In a short selling trading strategy, potential for profit is limited while risk of loss is infinite. Margin is stipulated due to all the reasons stated in the question. Hence the answer is option d.
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Why do short positions require margin?
a) Due to the credit risk of short-sellers b) Due...
QUESTION 14 Dealers' inventories can be made of: a. Long positions in securities. O b. Short...
QUESTION 14 Dealers' inventories can be made of: a. Long positions in securities. O b. Short positions in securities. O C. Both a. and b. o d. None of the above.
6. The 4 fundamental option positions are _____. Hint: This question is from the reading that...
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QUESTION 25 Which of the following option positions represents the most risk to an investor? a. A long put b. A long straddle. c. A long call. d. A short straddle. QUESTION 26 Mike believes that XYZ stock will increase in value. He buys 20 XYZ March 60 call options for $4 when the price of XYZ is $61. If XYZ falls to $55 and stays there through March, what will be Mike's gain or loss? O a. Gain $8,000...
A bank is able to reduce the default risk of a line of credit by which...
A bank is able to reduce the default risk of a line of credit by which method? a. syndication b. clean up requirement c. annual review of customer's credit status d. all of the above The main benefits associated with a well-designed concentration system include: a. higher opportunity costs b. greater control over balances c. less float d. greater control over balances and improved investment returns.
A bank is able to reduce the default risk of a line of credit by which...
A bank is able to reduce the default risk of a line of credit by which method? Da syndication b. clean up requirement cannual review of customer's credit status d. all of the above QUESTION 25 In deciding on short-term borrowing a firm should consider which important impact a reputational risk b human resources risk crefinancing risk none of the above
Which of the following is NOT a way to measure default risk? A. Credit ratings B....
Which of the following is NOT a way to measure default risk? A. Credit ratings B. Discriminant Analysis C. Examining yield spreads D. Technical Analysis E. All of the above ARE ways to measure default risk.
Assume that the real risk-free rate is 2% and that the maturity risk premium is zero....
Assume that the real risk-free rate is 2% and that the maturity risk premium is zero. If a 1-year Treasury bond yield is 5% and a 2-year Treasury bond yields 8%, what is the 1-year interest rate that is expected for Year 2? Calculate this yield using a geometric average. Do not round intermediate calculations. Round your answer to two decimal places. % What inflation rate is expected during Year 2? Do not round intermediate calculations. Round your answer to...
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A risk premium is a the difference between the earnings of a low risk asset and...
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QUESTION 14 Dealers' inventories can be made of: a. Long positions in securities. O b. Short positions in securities. O C. Both a. and b. o d. None of the above.
QUESTION 25 Which of the following option positions represents the most risk to an investor? a. A long put b. A long straddle. c. A long call. d. A short straddle. QUESTION 26 Mike believes that XYZ stock will increase in value. He buys 20 XYZ March 60 call options for $4 when the price of XYZ is $61. If XYZ falls to $55 and stays there through March, what will be Mike's gain or loss? O a. Gain $8,000...
A bank is able to reduce the default risk of a line of credit by which method? Da syndication b. clean up requirement cannual review of customer's credit status d. all of the above QUESTION 25 In deciding on short-term borrowing a firm should consider which important impact a reputational risk b human resources risk crefinancing risk none of the above
A risk premium is a the difference between the earnings of a low risk asset and a high risk asset Ob premium paid to a security holder to compensate him for bearing a higher risk c. both A&B od none of the above QUESTION 3 Profits of a monopoly are driven to zero a In the long run because the demand curve becomes more inelastic b. Immediately in the short-run as assets freely move from low-valued uses to high-valued uses...
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