Exam 29: Web 4:financial Derivatives

An option that can only be exercised at maturity is called

When a financial institution hedges the interest-rate risk for a specific asset,the hedge is called a

If a bank has more rate-sensitive assets than rate-sensitive liabilities

If you sell a $100,000 interest-rate futures contract for 110,and the price of the Treasury securities on the expiration date is 106,your ________ is ________.

If Second National Bank has more rate-sensitive liabilities then rate-sensitive assets,it can reduce interest rate risk with a swap that requires Second National to

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

If a bank manager wants to protect the bank against losses that would be incurred on its portfolio of treasury securities should interest rates rise,he could ________ options on financial futures.

The amount paid for an option is the

The seller of an option has the ________ to buy or sell the underlying asset while the purchaser of an option has the ________ to buy or sell the asset.

A tool for managing interest-rate risk that requires exchange of payment streams is a

All other things held constant,premiums on options will increase when the

A long contract requires that the investor

If a firm is due to be paid in euros in two months,to hedge against exchange-rate risk the firm should ________ foreign exchange futures ________.

Hedging risk for a short position is accomplished by

The number of futures contracts outstanding is called

A swap that involves the exchange of one set of interest payments for another set of interest payments is called

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

If a firm must pay for goods it has ordered with foreign currency,it can hedge its foreign exchange-rate risk by ________ foreign exchange futures ________.

An option allowing the owner to sell an asset at a future date is a

A call option gives the seller the