Long forward contract on an asset plus long position

Assignment Help Financial Management

Reference no: EM131843989

1. To hedge a short position in Treasury bonds, an investor most likely would

a ignore interest rate futures.

b buy S&P futures.

c buy interest rate futures.

d sell Treasury bonds in the spot market.

e None of these is correct.

2. On April 1, you sold one S&P 500 index futures contract (with one contract being on 250 times the index) at a futures price of 950. If on June 15th the futures price were 1012, what would be your profit (loss) if you closed your position (without considering transactions costs)?

a $1,550 loss

b $15,550 loss

c $15,550 profit

d $1,550 profit

e None of these is correct

3. A long forward contract on an asset plus a long position in a European put option on the asset with a strike price equal to the forward price is equivalent to

a A short position in a call option

b A short position in a put option

c A long position in a put option

d None of the above

Reference no: EM131843989

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