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21.
A forward contract:
22.
Which one of the following is true regarding forward contracts?
23.
A payoff profile:
24.
Futures contracts:
25.
Which of the following are futures exchanges?
I. New York Mercantile Exchange
II. New York Stock Exchange
III. Chicago Board of Trade
IV. NASDAQ
26.
Given the following information, what is the price per troy ounce that will be
used for today's marking-to-market for the December silver contract?
Silver - 5,000 troy oz.: dollars and cents per troy oz.
27.
What was the highest price per troy ounce for the December silver futures
contract today?
Silver - 5,000 troy oz.: dollars and cents per troy oz.
28.
Browning Enterprises currently has all fixed-rate debt. The firm would like
to convert part of this to floating-rate debt. Which one of the following will
accomplish this for the firm?
29.
Which one of the following is the primary difference between a swap
contract and a forward contract?
30.
Interest rate swaps:
I. benefit either the buyer or the seller, but not both.
II. are often used in conjunction with a currency swap.
III. are commonly used in business.
IV. can be used to change the index which determines the variable rate on a
firm's debt.
31.
Which one of the following methods of setting prices would reduce the
transactions exposure for both the buyer and seller of a swap contract?
32.
A swap dealer in the U.S.:
33.
Company A can borrow money at a fixed rate of 7.5 percent or a variable
rate set at prime plus 0.5 percent. Company B can borrow money at a
variable rate of prime plus 1 percent or a fixed rate of 7 percent. Company A
prefers a fixed rate and company B prefers a variable rate. Given this
information, which one of the following statements is correct?
34.
Dog's can borrow money at either a fixed rate of 8.25 percent or a variable
rate set at prime plus 0.5 percent. Cat's can borrow money at either a
variable rate of prime plus 1 percent or a fixed rate of 8 percent. Dog's
prefers a fixed rate and Cat's prefers a variable rate. Given this information,
which one of the following statements is correct?
35.
Murray's can borrow money at a fixed rate of 10.5 percent or a variable rate
set at prime plus 2.25 percent. Fred's can borrow money at a variable rate
of prime plus 1.5 percent or a fixed rate of 12 percent. Murray's prefers a
variable rate and Fred's prefers a fixed rate. Given this information, which
one of the following statements is correct?
36.
A call option contract:
37.
The buyer of an option contract:
38.
An option contract:
I. can be used to hedge risk.
II. can be used to speculate in the market.
III. can be based on a futures contract to create a futures option.
IV. cannot be based on a foreign currency.
39.
Which two of the following are key differences between an option contract
and a forward contract?
I. option contracts can be resold but forward contracts cannot
II. the option price is determined at settlement while the forward price is
determined when the contract is initiated
III. the rights and obligations of the buyer
IV. cost when contract initiated
40.
A firm with a variable-rate loan wants to protect itself from increases in
interest rates. Which of the following would interest this firm?
I. interest rate floor
II. interest rate cap
III. put option on an interest rate
IV. call option on an interest rate
