QUESTION 1

1. Gains and losses are recognized daily IMR = $2,530, MMR = $2,300, for a T-Bond futures $100,000

   Suppose you buy one June contract at the open of $98,500, Mondays settle price is 9810, and Tuesdays close is 96'30

   What is in your margin call in Tuesdays settle?

   		$967.5
   		$155.25
   		$1006.125
   		$2100.50
   		$445.125
   		$1562.5
   		$1500
   		$1750

1 points

QUESTION 2

1. (a. spot foreign exchange transactions b. forward foreign exchange transactions c. forward future exchange transactions d. currency option transactions) involve the immediate exchange of currencies at current exchange rates.

   		a
   		b
   		c
   		d

1 points

QUESTION 3

1. . The adverse selection problem is a. a method to find qualified customers in the financial markets. b. people tend to follow the new regulations on both sides of demand of supply. C. part of financial innovation d. applicants of insurance policies or loans tend to be those who are in need with poor credit history e. to encourage people to commit a crime.

   		a
   		b
   		c
   		d

1 points

QUESTION 4

1. A homeowner can obtain a $200,000, 30-year fixed-rate mortgage at a rate of 6.0 percent with zero points or at a rate of 5.5 percent with 2.25 points. How long must the owner stay in the house to make it worthwhile to pay the points if the payment saving is invested monthly? years (rounded) a. 1 b. 2 c. 3 d 4 e. 5 f. 6 g. 7 h. 8

   		a
   		b
   		c
   		d
   		e
   		f
   		g
   		h

1 points

QUESTION 5

1. An example of the moral hazard problem rises when a. poor people paying higher interest rate for a loan than rich people paying b. an auto-insurance buyer involving dangerous driving and informing insurers. C. investment bankers involving risky derivatives transactions and believing the government bailout will come. D. an insurance firm rejects paying to the beneficiary for a wife murdered by the husband

   		A
   		B
   		C
   		D

1 points

QUESTION 6

1. a. Secondary Mortgage Market b, Pass Through Securities c. Freddie Mae d. Mortgage Backed Bonds e. off balance sheet option operation) allow FIs to raise long-term low-cost funds without removing mortgages from their balance sheets

   		a
   		b
   		c
   		d
   		e

1 points

QUESTION 7

1. an investor starts with $1 million and converts it to 0.76 million pounds, which is then invested for one year. In a year the investor has 0.7795 million pounds, which she then . converts to dollars at an exchange rate of 0.72 pounds per dollar. The U.S. dollar annual rate of return earned was _____. a. 1.26 b. 2.26 c. 3.26 d 4.26 e. 5.26 f. 6.26 g. 7.26 h. 8.26 %

   		a
   		b
   		c
   		d
   		e
   		f
   		g
   		h

1 points

QUESTION 8

1. A European investor can earn a 4.76 percent annual interest rate in Europe or 2.76 percent per year in the United States. If the spot exchange rate is $1.58 per euro, at what one-year forward rate would an investor be indifferent between the U.S. and European investments? a. 1.4 b. 1.45 c. 1.50 d 1.55 e. 1.60 f. 1.65 g. 1.70 h. 1.75 $ per Euro.

   		a
   		b
   		c
   		d
   		e
   		f
   		g
   		h

1 points