7. Some of the risks that a swap dealer confronts are basis risk which is defined as:

Group of answer choices

[A] the probability that a country will impose exchange restrictions on a currency involved in a swap.

[B] a situation in which the delivery date on the futures contract doesnt coincide with the date the hedged asset needs to be purchased or sold.

[C] interest rate changing unfavorably before the swap bank can lay off to an opposing counterparty the other side of an interest rate swap entered into with a counterparty.

[D] the risk of fluctuating exchange rates.

8.Suppose you took a long position in a T-bill future priced at IMM index 95.5. What would be your profit or loss on the position if the price of a spot 91-day T-bill was trading at YTM of 5% (actual/365day-count convention) at the expiration?

Group of answer choices

[A] gain $840

[B] loss $840

[C] gain $900

[D] loss $900

9.Given the following information, what is the equilibrium 30-day T-bill futures price?

1) a 121-day spot T-Bill trading 97.129 to yield 5.25% 2) a 30-day risk-free rate of 3.75%

Group of answer choices

[A] $97.13

[B] $97.42

[C] $98.79

[D] $100.00

10. What type of hedge exists when the asset underlying the futures contract is not the same as the asset being hedged?

Group of answer choices

[A] nave hedge

[B] perfect hedge

[C] cross hedge

[D] direct hedge