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6 Which of the following is the correct definition of tick size? Review Later The amount of money that needs to be deposited with the
6 Which of the following is the correct definition of tick size? Review Later The amount of money that needs to be deposited with the exchange to open a buy or sell position on a futures contract The minimum price fluctuation per unit of the underlying asset of a futures contract The agreed price at which a futures contract is purchased The size of a derivative contract 7 Review Later Given the following information on a gold futures contract, calculate the net profit/loss for the contract buyer if the spot price of gold drops to $1,100/troy oz. Futures Contract Price $1,200.00/troy oz Initial Spot Price $1,200.00/troy oz Contract Size 100 troy oz Number of Contracts 20 Initial Margin Per Contract $5,000/contract Maintenance Margin Per Contract $4,500/contract Tick Size $0.10/troy oz -$200,000 -$20,000 DOOO -$100 -$50,000 8 Review Later Calculate the cost of buying and holding 3,000 barrels of oil at the spot price for one year, given the following assumptions: Spot Price $47/barrel Cost of Borrowing 3.0% Cost of Storing 3,000 Barrels $3,500 Carry Return $0 Number of Barrels 3,000 barrels $145,230 $148,730 OOOO $120,285 $144,500 9 What is an American option? Review Later An option that can only be exercised after one year An option that can only be exercised on the expiration date An option that can be exercised at a set number of times An option that can be exercised over a period until the expiration date 10 Review Later A European equity option contract has a strike price of $170, an expiration date of 30-Feb-2020, and a delta of -0.596. Which of the following is NOT true about this option contract? The holder of the option has the right to buy the stock for $170 per share. If the stock price goes up to $175, the holder is better off not exercising the option at expiration. If the stock price goes up by a dollar, the option price will fall by 59.6 cents. The holder can only exercise the option on 30-Feb-2020
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