Exam 24: Hedging with Financial Derivatives

A contract that calls for the investor to (possibly)sell securities on a future date is called a ________.

An option that gives the holder the right to buy an asset in the future is a put.

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

If you sell a short futures contract,you hope that bond prices will ________.

A call option gives the seller the ________ to ________ the underlying security.

Why have the futures markets grown so rapidly in recent years?

Which of the following is not a financial derivative?

Futures markets have grown rapidly because futures contracts

Options on futures contracts are referred to as ________.

The agency which regulates stock options is the

Future options are particularly useful for offsetting risk created when a bank ________.

An option that gives the owner the right to buy a financial instrument at the exercise price within a specified period of time is a(n)________.

A call option gives the owner the ________ to ________ the underlying security.

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

Financial derivatives include ________.

If you sell a futures contract on the S&P 500 Index at a price of 450 and the index rises to 500,you will ________.

The number of contracts outstanding in a particular financial future is the ________.

Futures contracts are subject to default risk.

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

One advantage of using swaps to eliminate interest-rate risk is that swaps