Exam 29: Web 4:financial Derivatives

If you sold a short futures contract you will hope that bond prices

An option allowing the holder to buy an asset in the future is a

If you sell twenty-five $100,000 futures contracts to hedge holdings of a Treasury security,the value of the Treasury securities you are holding is

By taking the long position on a futures contract of $100,000 at a price of 115 you are agreeing to ________ a ________ face value security for ________.

Hedging risk for a long position is accomplished by

By taking the short position on a futures contract of $100,000 at a price of 96 you are agreeing to ________ a ________ face value security for ________.

If one party pays a fixed fee on a regular basis in return for a contingent payment that is triggered by a downgrading of a firm's credit rating,that is called a

By taking the long position on a futures contract of $100,000 at a price of 96 you are agreeing to ________ a ________ face value security for ________.

If you bought a long futures contract you hope that bond prices

When interest rates fall,a bank that perfectly hedges its portfolio of Treasury securities in the futures market

An option that gives the owner the right to sell a financial instrument at the exercise price within a specified period of time is a

The seller of an option has the

The advantage of forward contracts over future contracts is that they

If you sell a $100,000 interest-rate futures contract for 105,and the price of the Treasury securities on the expiration date is 108,your ________ is ________.

If you bought a long contract on financial futures you hope that interest rates

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

Forward contracts are of limited usefulness to financial institutions because

Futures contracts are regularly traded on the

Suppose Ford Motor Company issues a 5% bond with a stipulation that if a national index of SUV sales drops by 10%,then Ford can decrease the coupon rate to 3%.This security is called a

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