1. What is the difference in cash flow between short-selling an asset and entering a short futures position?
2. What type of interest rate swap would be appropriate for a speculator who believes interest rates soon will fall?
3. Futures contracts and options contracts can be used to modify risk. Identify the fundamental distinction between a futures contract and an option contract, and briefly explain the difference in the manner that futures and options modify portfolio risk.
4. Conventional wisdom says one should measure a managers investment performance over an entire market cycle. What arguments support this contention? What arguments contradict it?