A) requires that payment be made in full when the contract is originated. B) provides the buyer with an option to buy an asset on the settlement date at the forward price. C) is a binding agreement on both the buyer and the seller and nets out as a zero sum game. D) is marked to the market daily at the seller's request. E) allows for immediate delivery at an agreed upon price which is to be paid on the settlement date. A) requires that payment be made in full when the contract is originated. B) provides the buyer with an option to buy an asset on the settlement date at the forward price. C) is a binding agreement on both the buyer and the seller and nets out as a zero sum game. D) is marked to the market daily at the seller's request. E) allows for immediate delivery at an agreed upon price which is to be paid on the settlement date.

Exam 23: Risk Management: An Introduction to Financial Engineering

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Sue recently purchased a right to buy 100 shares of ABC stock for $27.50 a share if she so chooses at any time within the next four months. Which one of the following does Sue own?

(Multiple Choice)

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Question 21

If a firm creates an interest rate collar on a variable rate loan, then the rate the firm pays will always:

(Multiple Choice)

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Question 22

A forward contract:

(Multiple Choice)

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Question 23

The breakdown of the Bretton Woods accord caused _____ volatility to increase.

(Multiple Choice)

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Question 24

What is the closing value on this day for one March futures contract on ethanol? Ethanol - 29,000 U.S. gallons: u.S. dollars and cents per gallon

(Multiple Choice)

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Question 25

Explain both the concept of financial engineering and why it is becoming increasingly popular in today's business environment.

(Essay)

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Question 26

A call option contract:

(Multiple Choice)

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Question 27

An option contract: I. can be used to hedge risk. II. can be used to speculate in the market. III. can be based on a futures contract to create a futures option. IV. cannot be based on a foreign currency.

(Multiple Choice)

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Question 28

Company A can borrow money at a fixed rate of 7.5 percent or a variable rate set at prime plus 0.5 percent. Company B can borrow money at a variable rate of prime plus 1 percent or a fixed rate of 7 percent. Company A prefers a fixed rate and company B prefers a variable rate. Given this information, which one of the following statements is correct?

(Multiple Choice)

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Question 29

You purchased four April futures contracts on gold when the price quote was 687.7. Given today's closing prices as shown in the table, what is your current profit or loss? Gold - 100 troy oz.: u.S. dollars and cents per troy oz.

(Multiple Choice)

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Question 30

By definition, which one of the following contracts is marked to the market on a daily basis?

(Multiple Choice)

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Question 31

Which one of the following can a firm do if it effectively manages its financial risks?

(Multiple Choice)

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Question 32

Which one of the following is the primary difference between a swap contract and a forward contract?

(Multiple Choice)

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Question 33

Which one of the following statements is correct in relation to a firm's short-run financial risk?

(Multiple Choice)

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Question 34

You purchased two May futures contracts on silver when the price quote was 10.420. Given today's closing prices as shown in the table, your total profit or loss to date is: Silver - 5,000 troy oz.: Dollars and cents per troy oz.

(Multiple Choice)

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Question 35

You believe the price of a stock is going to decline within the next three months. Which one of the following option payoff profiles will reflect a profit if your belief is correct?

(Multiple Choice)

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Question 36

Explain why a swap is effectively a series of forward contracts.

(Essay)

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Question 37

What is the closing value on this day for one March futures contract on silver? Silver - 5,000 troy oz.: u.S. dollars and cents per troy oz.

(Multiple Choice)

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Question 38

How much will you pay to purchase five August 125 orange juice futures put option contracts? Orange juice - 15,000 lbs: u.S. cents per lb.

(Multiple Choice)

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Question 39

Which one of the following methods of setting prices would reduce the transactions exposure for both the buyer and seller of a swap contract?

(Multiple Choice)

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Question 40

Showing 21 - 40 of 71

Exam 23: Risk Management: An Introduction to Financial Engineering

Sue recently purchased a right to buy 100 shares of ABC stock for $27.50 a share if she so chooses at any time within the next four months. Which one of the following does Sue own?

If a firm creates an interest rate collar on a variable rate loan, then the rate the firm pays will always:

A forward contract:

The breakdown of the Bretton Woods accord caused _____ volatility to increase.

What is the closing value on this day for one March futures contract on ethanol? Ethanol - 29,000 U.S. gallons: u.S. dollars and cents per gallon

Explain both the concept of financial engineering and why it is becoming increasingly popular in today's business environment.

A call option contract:

An option contract: I. can be used to hedge risk. II. can be used to speculate in the market. III. can be based on a futures contract to create a futures option. IV. cannot be based on a foreign currency.

You purchased four April futures contracts on gold when the price quote was 687.7. Given today's closing prices as shown in the table, what is your current profit or loss? Gold - 100 troy oz.: u.S. dollars and cents per troy oz.

By definition, which one of the following contracts is marked to the market on a daily basis?

Which one of the following can a firm do if it effectively manages its financial risks?

Which one of the following is the primary difference between a swap contract and a forward contract?

Which one of the following statements is correct in relation to a firm's short-run financial risk?

You purchased two May futures contracts on silver when the price quote was 10.420. Given today's closing prices as shown in the table, your total profit or loss to date is: Silver - 5,000 troy oz.: Dollars and cents per troy oz.

You believe the price of a stock is going to decline within the next three months. Which one of the following option payoff profiles will reflect a profit if your belief is correct?

Explain why a swap is effectively a series of forward contracts.

What is the closing value on this day for one March futures contract on silver? Silver - 5,000 troy oz.: u.S. dollars and cents per troy oz.

How much will you pay to purchase five August 125 orange juice futures put option contracts? Orange juice - 15,000 lbs: u.S. cents per lb.

Which one of the following methods of setting prices would reduce the transactions exposure for both the buyer and seller of a swap contract?

Introduction to Corporate Finance

Financial Statements, Taxes, and Cash Flow

Working With Financial Statements

Long-Term Financial Planning and Growth

Introduction to Valuation: The Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Project Analysis and Evaluation

Some Lessons From Capital Market History

Return, Risk, and the Security Market Line

Cost of Capital

Raising Capital

Financial Leverage and Capital Structure Policy

Dividends and Dividend Policy

Short-Term Finance and Planning

Cash and Liquidity Management

Credit and Inventory Management

International Corporate Finance

Behavioral Finance: Implications for Financial Management

Options and Corporate Finance

Option Valuation

Mergers and Acquisitions

Leasing

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