Question
1. Suppose one has a short position in futures. If the futures price increases from yesterday's price, then he will make a positive gain today.
1. Suppose one has a short position in futures. If the futures price increases from yesterday's price, then he will make a positive gain today.
true or false
2. Suppose a company is planning to start an interest rate swap in the future. In this case, which of the following will provide the best hedge against the interest rate risk?
T-bond futures option
Eurodollar futures option
Interest rate floor
Swaption
3.For selling its products in UK, XYZ will receive 2.5 million British Pounds next March. Which of the following is the best action today in order to hedge against FOREX risk?
Short 40 British Pounds futures contracts expiring in March
Long 40 British Pounds futures contracts expiring in March
Short 80 British Pounds futures contracts expiring in March
Long 80 British Pounds futures contracts expiring in March
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started