Exam 9: Derivatives: Futures, Options, and Swaps

With a put option, the option holder:

Considering interest-rate swaps, the swap rate is:

A futures contract is a forward contract with some important differences.Explain. A futures contract is a forward contract that has been standardized and which is sold through an organized exchange.Forward contracts generally are private agreements between two parties and as a result are customized and therefore difficult to sell.

A lender obtains funds from depositors by offering short-term interest rates on savings accounts.The lender uses these funds to make longer-term installment loans.Explain how the lender might make use of the futures market to hedge the risk taken.

Consider a call option; in terms of the option writer and option holder, who is the buyer? Who is the seller? Finally, who has the option? Explain.

There's a call option written for 100 shares of GM stock for $85.00 a share, prior to the third Friday of October 2017: The option writer:

Which of the following would tend to decrease the size of the time value of the option?

Considering a put option, an increase in the strike price:

A U.S.Treasury bond dealer with a large portfolio who sells a futures contract for U.S.Treasury bonds is:

The two parts that make up an option's price are:

Marking to market is a process that:

If we have a stock selling for $95.00 and a call option for this stock has a strike price of $82.00 and an option price of $13.60:

One argument why farmers in poor countries remain poor is:

Which of the following statements is true?

How can we link the lack of futures markets in poor countries to the fact that farmers in poor countries are likely to remain poor?

A call option described as at the money would find:

The main difference between European and American options is:

Speculators differ from hedgers in the sense that:

The option holder is:

Users of commodities are: