e. a and b. f. a and c. g. b and c. h. b, c, and d. i. all of the above. 6. A mutual fund manager sold a number of stock index futures contract to protect her portfolios. This is considered a_hedge and she can always close out her futures position prior to expiration by long, exercising her futures b. a. short, exercising her futures long, purchasing an equivalent number of futures d. c. short, purchasing an equivalent number of futures 7. The annual volatility of an asset price is 90%. Determine the corresponding daily volatility assuming there are 225 trading days in a year. The answer should be- a. 2% b. 6% c. 0.27% d. 4% e. none of the above 8. Position traders are typically characterized by a. b. c. d. e. holding overnight positions profit from one or two ticks' profit from price movement due to major announcements a and b a and o 9 The difference between a futures and a forward contracts is (are) a. Futures are traded on an organized exchange, while forwards are not. b. Futures contracts are standardized while forwards are tailor-made to the customers' specifications c. Futures contracts are guaranteed by a central clearing-house, while forwards are not. d. Futures contracts are more effective in hedging than forward contracts. e. All of the above. f. a and b. g. a, b, and o 10. A trader can close out a long futures position by using a sell order to sell his holding. making an off-setting trade using either one of the above two methods. a. b. c. 11. The maximum possible value of a call option is a. b. c. d. e. zero present value of the strike price its intrinsic value the price of the underlying asset, for example, the stock price none of the above