Forward contracts-the buyer of put option

Assignment Help Financial Management

Reference no: EM132061038

1. Forward contracts are:

a. All of them

b. Not standard contracts

c. Private contracts.

d. Legally binding

2. The characteristics of a future market are:

a. Leverage

b. All of them

c. Booking Date and Clearing date are different

d. Need an underlying asset

3. The buyer of a PUT option:

a. Has the right to sell the underlying asset

b. Has the obligation to buy the underlying asset if the seller of the PULL Option wants

c. Has the obligation to sell the underlying asset if the seller of the PULL Option wants

d. Has the right to buy the underlying asset

4. When investors use a derivate instrument to reduce his exposure to the price volatility of certain underlying assets, he is said to be:

a. Investing

b. Hedging

c. Speculating

d. Arbitrating

5. Most preferred stocks have a feature that requires all last unpaid dividend payments to paid before any common stock dividends can be paid. What is the name of this feature?

a. participating

b. cumulative

c. convertible

d. provisional

6. Future Markets are the evolution of Forward contracts because of:

a. Introduce three innovations; standardization of size, standardization of delivery dates, a centralized exchange and a clearing house

b. Introduce three innovations; standardization of size, standardization of delivery dates and clearing house

c. Introduce three innovations; standardization of contract, standardization of delivery dates and clearing house

d. Introduce three innovations; standardization of size, standardization of delivery dates and mark to market

7. If you are SHORT in a Future contract:

a. You can get limited profits and unlimited losses

b. You can get unlimited profits and limited losses

c. You can get unlimited profits and unlimited losses

d. None of them

8. Imagine that you are the seller of a forward contract. At the maturity date, you want to compare Spot Price and the Forward Price signed in the contract to check and happened in case of not signing the forward contract. What do you need to take into account regarding to the contract?

a. If Spot Price is lower than the Forward Price you will ask for the difference to the buyer.

b. Peace of mind

c. None of them

d. If Sport Price is higher than the forward Price you will not deliver the underlying asset

9. Select the CORRECT statement about option sellers. They have:

a. The right to exercise their options.

b. Significant or Unlimited risk

c. Unlimited profit potential

d. Limited risk

10. Put Options and Call Options

a. Only Call Option can be bought and sold

b. Only Put Option can be bought and sold

c. Both can be bought and sold

d. It doesn’t matter, to be bought

Reference no: EM132061038

Questions Cloud

Prepare schedule of cash disbursements : Prepare a schedule of cash disbursements for January, February, and March

Regarding the award on sign at the grocery store : I offer a $200 reward for whomever finds my lost dog. You see my announcement regarding the award on a sign at the grocery store.

What is the company monthly fixed operating cost : What is the company’s monthly fixed operating cost? What is the monthly operating break-even point in units? In dollars?

Hire peter to teach him basic gardening techniques : Paul wants to hire Peter to teach him basic gardening techniques, The agreement is not in writing, is it a valid, enforceable contract?

Forward contracts-the buyer of put option : Forward contracts are. The characteristics of a future market are. The buyer of a PUT option:

Capital budgeting in environment of scarce economic resource : What are the risk associated with strict capital budgeting in an environment of scarce economic resources? What should you do to avoid these risks?

What are the projects IRRs assuming the WACC : What are the projects' NPVs assuming the WACC is 15%? What are the projects' IRRs assuming the WACC is 10%?

What is the final net free cash flow in year five : What is the final net free cash flow in year 5? What is the NPV Of the project given 9% require rate of return?

Company manufacturing blades : The following information is available about A ltd a company manufacturing blades.

User Account

All Pages