Exam 29: Web 4:financial Derivatives

Options on individual stocks are referred to as

Hedging by buying an option

The price specified on an option at which the holder can buy or sell the underlying asset is called the

An option that can be exercised at any time up to maturity is called

If you buy a put option on treasury futures at 110,and at expiration the market price is 115,the ________ will ________ exercised.

Suppose you are currently in the long position of a long-term bond.In this case,to hedge against a capital loss,you would enter into a ________ contract to ________ a long-term bond in the future.

A advantage of using swaps to hedge interest-rate risk is that swaps

By hedging a portfolio,a bank manager

The payoffs for financial derivatives are linked to

If,for a $1000 premium,you buy a $100,000 put option on bond futures with a strike price of 110,and at the expiration date the price is 114,your ________ is ________.

Which of the following is not a financial derivative?

If,for a $1000 premium,you buy a $100,000 put option on bond futures with a strike price of 114,and at the expiration date the price is 110,your ________ is ________.

A contract that requires the investor to buy securities on a future date is called a

A firm that sells goods to foreign countries on a regular basis can avoid exchange-rate risk by

Parties who have sold a futures contract and thereby agreed to ________ (deliver)the bonds are said to have taken a ________ position.

On the expiration date of a futures contract,the price of the contract converges to the

Explain the margin requirement for financial futures and how marking to market affects the margin account.

Parties who have bought a futures contract and thereby agreed to ________ (take delivery of)the bonds are said to have taken a ________ position.

Options are contracts that give the purchasers the

A short contract requires that the investor