Question
Question 47 Financial futures have become an increasingly attractive investment alternative since the Chicago Board of Trade (CBOT) began trading them in 1977, and their
Question 47
Financial futures have become an increasingly attractive investment alternative since the Chicago Board of Trade (CBOT) began trading them in 1977, and their hedging function partly accounts for the growth in trading. Which of the following statements concerning financial futures is true?
Financial futures protect the investment portfolio against inflation in the economy. | ||
Investors seek protection against the increasing volatility of interest rates. | ||
Unlike commodity futures, factors that influence price shifts are not supply and demand of the commodity but buyer psychology. | ||
A reason for their popularity is that trading is restricted to government obligations, which reduces risks. | ||
All of the above are true statements |
Question 40
A call option differs from a put option in that
a call option obliges the investor to purchase a given number of shares in a specific common stock at a set price; a put obliges the investor to sell a certain number of shares in a common stock at a set price. | ||
both give the investor the opportunity to participate in stock market dealings without the risk of actual stock ownership. | ||
a call option gives the investor the right to purchase a given number of shares of a specified stock at a set price; a put option gives the investor the right to sell a given number of shares of a stock at a set price. | ||
a put option has risk, since leverage is not as great as with a call. | ||
none of the above |
Question 38
The derivative based strategy known as portfolio insurance involves
The sale of a put option on the underlying security position. | ||
The purchase of a put on the underlying security position. | ||
The sale of a call on the underlying security position. | ||
The purchase of a call on the underlying security position. | ||
b and d. |
Question 37
An equity portfolio manager can neutralize the risk of falling stock prices by entering into a hedge position where the payoffs are
Not correlated with the existing exposure. | ||
Positively correlated with the existing exposure. | ||
Negatively correlated with the existing exposure. | ||
Any of the above. | ||
None of the above. |
Question 28
Growth rates of the (1) labor force, (2) average number of hours worked and (3) labor productivity are the main determinants of a foreign country's
Dividend payout ratio. | ||||||||||||||||||||||||||||||||
Beta. | ||||||||||||||||||||||||||||||||
Real risk free rate. | ||||||||||||||||||||||||||||||||
Nominal risk free rate. | ||||||||||||||||||||||||||||||||
Risk premium. Question 31 Revenue bonds are
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