If you buy a

put optionput option

for $100,000 face value long-term Treasury bonds for a 2-point premium and a strike price of 115 that expires at the end of June, and at the end of June the price of the bond is 113, then you will

A.

not exercise the option and break even.

B.

exercise the option and earn a profit of $2,000.

C.

exercise the option and earn a profit of $4,000.

D.

not exercise the option and lose $ 2 comma 000.not exercise the option and lose $2,000.

E.

exercise the option and break even.exercise the option and break even.

Suppose you purchase $100,000 face value long-term U.S. Treasury bonds at 110 and you wish to hedge your interest-rate risk over the next year. You sell a futures contract for $100,000 face value U.S. Treasury bonds for delivery in one year for 110. When one year has passed, interest rates have risen so that the price of $100,000 face value Treasury bond is 105. Which of the following statements is true?

A.

You successfully employed a call option.

B.

You successfully employed a put option.

C.

You failed to reduce your interest-rate risk.

D.

You successfully hedged your interest-rate risk.

E.

You successfully engaged in an interest-rate swap.

Match the Federal Reserve entity to its responsibilities and duties given on the left.

clear checks

determines margin requirements

meets eight times a year

federal reserve bank federal open market board of govrner