1 pts Question 1 All of the following are differences between forward and futures contracts, EXCEPT: No exception, all of the listed are differences between forward and futures contracts Flexible vs standardized contract size The only exchange of money occurs at delivery vs daily marked-to-market Subject to credit risk of the parties vs guaranteed by an exchange in most cases Most are settled by delivery instead vs by offset Typically large vs typically small contract size Obligation to deliver falls on both parties vs only one side Next 80 000 000 F4 90 F2 DII FB DD F9 F6 F5 F3 % & 6. 7 8 9 1 pts Question 2 All of the following are terms (what needs to be spelled out) in a currency forward contract, EXCEPT: Oo oo What is the delivery date of the contract No exception, all of the listed are terms in a currency forward contract Which foreign currency is being bought/sold How much of a foreign currency is being bought/sold What is the price per unit of foreign currency Which party can walk away from the contract Question 3 1 pts The British Pound is currently trading at $1.30. The market consensus (best guess) is that on December 15 it will most likely be trading at $1.40. The most likely current exercise/strike price for a British Pound call expiring on December 15 is $_..... 1.40 1.00 1.25 1.50 1.45 1.05 1.35 1.15 DO 1.30 1.20 1.10 Question 4 1 pts A non-deliverable forward contract is designed not be delivered at expiration, since its terms don't match the actual need. It is therefore, conceptually similar to aln): American style call option European style put option Credit default swap European style call option Futures contract Interest rate swap American style put option Question 5 1 pts Metallgesellschaft's primary problem was: Not understanding you cannot hedge an exposure to futures by using call options Not understanding you cannot hedge an exposure to forwards by using futures Not understanding you cannot hedge an exposure to forwards by using call options Not understanding you cannot hedge an exposure to forwards by using put options Not understanding you cannot hedge an exposure to futures by using forwards Not understanding you cannot hedge an exposure to futures by using put options Question 6 1 pts Assume that one year ago, the spot rate of the British pound was $2.00. One year ago, the one-year futures contract of the British pound exhibited a discount of 4%. At that time, you sold futures contracts on pounds, representing a total of 1 million pounds. From one year ago to today, the pound's value depreciated against the dollar by 5%. Determine the total dollar amount of your profit or loss from your futures contract. (negative number indicates a loss) 100000 80000 -60000 80000 40000 0 20000 -20000 100000 OOOO 60000 -40000 Question 7 1 pts Time Atterg 1 Hou We'r SlightlyNervous, a US-based MNC, will need 500,000 a year from now, and decides to lock into a rate of 2.00$/ and purchase a forward contract right now. A year later, at the time when the delivery on the forward contract is made, the spot exchange rate turns out to be 1.85$/. The company, by purchasing the forward contract instead of waiting to buy the at the spot rate, (saved/lost) $ Lost $25,000 Saved $50,000 Lost $75,000 Lost $100,000 Saved $25,000 Saved $75,000 Saved $100,000 Neither saved nor lost Lost $50,000 cam 2 ted: Nov 3 at 9:30am uiz Instructions first 24 questions are the "regular" questions, worth a total of 100. The last 4 questions (25-28) are extra credit, worth 2.5 points each (10 points total). You must finish by 10:50am. 1 pts D Question 8 The spot exchange rate for the euro is $1.25, and the 6-month forward is $1.35. The euro is trading at a (premium/discount) of Premium: 24% Premium 32% Premium 4% Premium 8% Premium 10% Premium 12% Previous Next so ODO Doc F4 da D FR DO F2 75 $ 70 A 3 4 & 7 5 6 6 8 ) 0 8 9 E R T Y U 1 0 D Question 9 1 pts All of the following are terms (what needs to be spelled out) in a currency option contract, EXCEPT: What is the price per unit of foreign currency Which foreign currency is being bought/sold No exception, all of the listed are terms in a currency option contract How much of a foreign currency is being bought/sold What is the delivery date of the contract Which party can walk away from the contract The first 24 questions are the "regular" questions, worth a total of 100. The last 4 questions (25-28) are extra credit, and worth 2.5 points each (10 points total). You must finish by 10:50am. Question 10 1 pts American style put option Is never worth exercising early because an American style option is never in the money, Is never worth exercising early because the holder of the option can always make more money by selling it. Is always worth exercising early whenever the option is in the money, Is never worth exercising early because an American style option is always by definition at the money. Might in some scenarios be worth exercising early because the underlying asset may become worthless. therefore maximizing the value of the option. Is always worth exercising early because an American style option is always by definition at the money