Question 28

Forwards & Futures: A futures contract is similar to a forward contract, differing more

importantly in the aspects of standardization and daily marking to market, which is the process by

which gains and losses on futures contract positions are settled daily. Futures contracts can be

used for hedging or speculating.

True

False

Question 29

Two Classes of LLP Partners. The two classes of LLP partners are Equity Partners and Debt

Partners. Debt partners, while limited in their authority, are nonetheless responsible for

providing the majority of the capital investment.

True

False

Question 30

M^2 Measure of Performance. To compute the M^2 measure-of-performance, a managed

portfolio is adjusted such that the adjusted portfolio matches the volatility of the benchmark

portfolio. Because the adjusted portfolio and the benchmark have the same standard deviation, an

analyst can compare their performance simply by comparing returns.

True

False

Question 31

Option Hedge Ratio: Hedge ratios (or deltas) are one for deep out-of-the-money call options and

zero for deep in-the-money calls.

True

False

Question 33

Portfolio Constraints (PC) in Investment Policy Statements. PC can include liquidity, investment

horizon, regulations, tax considerations, and unique needs.

True

False