1. ____ refers to the use of futures contract with an underlying asset different from that of asset to be hedged. It is also implies of asset mismatch.

a. Novation

b. Cross hedging

c. Arbitraging

d. Convergence property

2.

Information on your Portfolio
Expected dividend yield	0%
Index Linked Portfolio Value	RM2,000,000
Portfolio Beta	1.15
FBM KLCI Index	1,545.35
Risk-free rate	3%
FKLI index	1,540.50

Assume the market falls by 15% and FKLI decreases to 1,234.5 after 3 months, what is your gain/loss from your hedging strategy?

a. Profit RM21,900.

b. Profit 51,900.

c. Profit RM36,900.

d. Profit RM6,900.

3. Based on the contract specification of FKLI, if the current third (3rd) contract month is September, which contract months sequence listed below is NOT correct.

a. May, June, September and December

b. April, May, September and December

c. June, July, September and December

d. July, August, September and December