The basis is defined as spot minus futures a trader is

Reference no: EM13617897

1. Which of the following is NOT true?

A) When a CBOE call option on IBM is exercised, IBM issues more stock

B) An American option can be exercised at any time during its life

C) An call option will always be exercised at maturity if the underlying asset price is greater than the strike price

D) A put option will always be exercised at maturity if the strike price is greater than the underlying asset price

2. The price of a stock on February 1 is $48. A trader sells 200 put options on the stock with a strike price of $40 when the option price is $2. The options are exercised when the stock price is $39. The trader's net profit or loss is

A) Loss of $800

B) Loss of $200

C) Gain of $200

D) Loss of $900

3. Which of the following is NOT true?

A) Futures contracts nearly always last longer than forward contracts

B) Futures contracts are standardized; forward contracts are not

C) Delivery or final cash settlement usually takes place with forward contracts; the same is not true of futures contracts

D) Forward contracts usually have one specified delivery date; futures contract often have a range of delivery dates

4. A company enters into a long futures contract to buy 1,000 units of a commodity for $60 per unit. The initial margin is $6,000 and the maintenance margin is $4,000. What futures price will allow $2,000 to be withdrawn from the margin account?

A) $58

B) $62

C) $64

D) $66

5.The basis is defined as spot minus futures. A trader is hedging the sale of an asset with a short futures position. The basis increases unexpectedly. Which of the following is true?

A) The hedger's position improves

B) The hedger's position worsens

C) The hedger's position sometimes worsens and sometimes improves

D) The hedger's position stays the same

Reference no: EM13617897

Questions Cloud

You want to withdraw 3000 once year at the begining of each : you want to withdraw 3000 once year at the begining of each year for 5 years. r8. how much money do you need to

A company is producing an electromagnetic field parts for : a company is producing an electromagnetic field parts for this it requires material alpha whose original standard

The canning company has been hard hit by increased : the canning company has been hard hit by increased competition. analysts predict that earnings and dividends will

You want to withdraw 3000 once year at the end of each year : you want to withdraw 3000 once year at the end of each year for 5 years starting 3 years from and ending 7 years from

The basis is defined as spot minus futures a trader is : 1. which of the following is not true?a when a cboe call option on ibm is exercised ibm issues more stockb an american

Calculate the after-tax cost of a 25 million debt issue : calculate the after-tax cost of a 25 million debt issue that pullman mfg corp 40 marginal tax rate is planning to place

Vargo inc has a beta estimated by value line of 13 the : vargo inc has a beta estimated by value line of 1.3. the current risk-free rate short term is 7.5 and the market risk

Acompany has a share price of 2450 and 118 million shares : 1.a company has a share price of 24.50 and 118 million shares outstanding. its book equity is 688 million its book

Microtech corporation is expanding rapidly and it currently : microtech corporation is expanding rapidly and it currently needs to retain all of its earnings hence it does not pay

User Account

All Pages