Question
need some homework help please Which of the following statements about forwards, futures, and options is correct? A. Forward contracts and futures contracts are economically
need some homework help please
Which of the following statements about forwards, futures, and options is correct?
A. Forward contracts and futures contracts are economically similar, but vary greatly in how they are traded.
B.Futures contracts and options contracts are economically similar, but vary greatly in how they are traded.
C. Forward contracts and options contracts are economically similar, but vary greatly in how they are traded.
D Forward contracts, futures contracts, and options contracts are all economically similar, but vary greatly in how they are traded.
E. None of the above answers.
Problem 5
One can describe a forward contract as agreeing today to buy a product:
A. At a later date at a price to be set in the future; B. Today at its current price; C. Today at a price to be set in the future; D. At a later date at a price set today;
E. If and only if its price rises above its exercise price
Problem 6
1
The seller of a forward contract agrees to:
A. Deliver a product at a later date for a price set today. B. Receive a product at a later date at the price on that later date. C. Receive a product at a later date for a price set today. D. Deliver a product at a later date for a price set on that later date. E. None of the above answers.
Problem 7
The price for immediate delivery of a commodity is called the:
A. Forward price. B. Exercise price. C. Spot price. D. Impact price. E. English price.
Problem 8
Hedging contracts on a futures exchange eliminates:
A. Market risk. B. Counterparty risk. C. Default risk. D. Currency risk. E. None of the above answers.
Problem 9
Four investors enter into long oil contracts. Three are speculators and one is hedging. Which of the following is hedging?
A. Farmer B. Cereal company C. Mutual fund D. Airline company E. None of these answers
Problem 10
What investment would be a hedge for a corn farmer?
A. Long corn put option. B. Long corn call option. C. Short corn call option. D. Long corn futures. E. None of these answers
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