21. Which of the following correctly expresses the profit on a hedge? (Points : 1) the basis when the hedge is closed the change in the basis the spot profit minus the futures profit the futures profit minus the spot profit none of the above

Question 22. 22. What happens to the basis through the contract's life? (Points : 1)

it initially decreases, then increases it initially increases, then decreases it remains relatively steady it moves toward zero none of the above

Question 23. 23. Find the profit if the investor enters an intramarket spread transaction by selling a September futures at $4.5, buys an December futures at $7.5 and then reverses the September futures at $5.5 and the December futures at $9.5. (Points : 1)

-3 -2 2 1 none of the above

Question 24. 24. Quantity risk is (Points : 1)

the difficulty in measuring the volatility the uncertainty about the size of the spot position the risk of mismatching the futures maturity to the spot maturity the possibility of regression error none of the above

Question 25. 25. The relationship between the spot yield and the yield implied by the futures price is called (Points : 1)

the duration the price sensitivity the tail the hedge ratio the yield beta

Question 26. 26. The difference between the swap rate and the rate on a Treasury security of the same maturity is called the (Points : 1)

swap spread risk premium swap basis settlement spread LIBOR

Question 27. 27. Interest rate swap payments are made (Points : 1)

on the last day of the quarter on the first day of each month at whatever dates are agreed upon by the counterparties on the 15th of the agreed-upon months on the last day of the month

Question 28. 28. To determine the fixed rate on a swap, you would (Points : 1)

use put-call parity price it as the issuance of a fixed rate bond and purchase of a floating rate bond or vice versa use the same fixed rate as that of a zero coupon bond of equivalent maturity use the continuously compounded rate for the shortest maturity bond none of the above

Question 29. 29. Which of the following is not a type of swap? (Points : 1)

settlement swaps commodity swaps interest rate swaps equity swaps currency swaps

Question 30. 30. The underlying amount of money on which the swap payments are made is called (Points : 1)

settlement value market value notional principal base value equity value