Exam 7: Foreign Currency Derivatives: Futures and Options

The major difference between currency futures and forward contracts is that futures contracts are standardized for ease of trading on an exchange market whereas forward contracts are specialized and tailored to meet the needs of clients.

(True/False)

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Question 41

Foreign currency options are available both over-the-counter and on organized exchanges.

(True/False)

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Question 42

A trader who is buying options of longer maturities will pay more,and proportionately more,for the longer maturity options.

(True/False)

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Question 43

The sensitivity of the option premium to a small change in the spot exchange rate is called the gamma.

(True/False)

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Question 44

A call option whose exercise price exceeds the spot price is said to be:

(Multiple Choice)

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Question 45

For a $1.50/£ call option with an initial premium of $0.033/£ and a rho value of 0.2,after an increase in the U.S.dollar rate from 8% to 9% - the new ATM optiom premium would be:

(Multiple Choice)

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Question 46

A trader who is purchasing a call option on foreign currency should do so before the domestic interest rate rises.

(True/False)

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Question 47

Why are foreign currency futures contracts more popular with individuals and banks while foreign currency forwards are more popular with businesses?

(Essay)

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Question 48

As an option moves further in-the-money delta moves toward _______.

(Multiple Choice)

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Question 49

The value of a European style call option is the sum of two components:

(Multiple Choice)

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Question 50

Define and explain the logic for the time value of an option.Explain the value of the time value of an option for deep out-of-the money and deep in-the-money options.

(Essay)

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Question 51

Which of the following is NOT a factor in determining the premium price of a currency option?

(Multiple Choice)

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Question 52

The buyer of a long call option:

(Multiple Choice)

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Question 53

Traders who believe volatilities will fall significantly in the near-term will:

(Multiple Choice)

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Question 54

The Delta of an option is defined as:

(Multiple Choice)

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Question 55

The buyer (long)of a put option:

(Multiple Choice)

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Question 56

An option can be exercised only on its expiration date,whereas a/an option can be exercised anytime between the date of writing up to and including the exercise date.

(Multiple Choice)

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Question 57

About ________ of all futures contracts are settled by physical delivery of foreign exchange between buyer and seller.

(Multiple Choice)

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Question 58

The price of an option is always somewhat greater than its intrinsic value,since there is always some chance that the intrinsic value will rise between the present and the expiration date.

(True/False)

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Question 59

The maximum gain for the purchaser of a call option contract is while the maximum loss is .

(Multiple Choice)

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Question 60

Showing 41 - 60 of 88

The major difference between currency futures and forward contracts is that futures contracts are standardized for ease of trading on an exchange market whereas forward contracts are specialized and tailored to meet the needs of clients.

Foreign currency options are available both over-the-counter and on organized exchanges.

A trader who is buying options of longer maturities will pay more,and proportionately more,for the longer maturity options.

The sensitivity of the option premium to a small change in the spot exchange rate is called the gamma.

A call option whose exercise price exceeds the spot price is said to be:

For a $1.50/£ call option with an initial premium of $0.033/£ and a rho value of 0.2,after an increase in the U.S.dollar rate from 8% to 9% - the new ATM optiom premium would be:

A trader who is purchasing a call option on foreign currency should do so before the domestic interest rate rises.

Why are foreign currency futures contracts more popular with individuals and banks while foreign currency forwards are more popular with businesses?

As an option moves further in-the-money delta moves toward _______.

The value of a European style call option is the sum of two components:

Define and explain the logic for the time value of an option.Explain the value of the time value of an option for deep out-of-the money and deep in-the-money options.

Which of the following is NOT a factor in determining the premium price of a currency option?

The buyer of a long call option:

Traders who believe volatilities will fall significantly in the near-term will:

The Delta of an option is defined as:

The buyer (long)of a put option:

An option can be exercised only on its expiration date,whereas a/an option can be exercised anytime between the date of writing up to and including the exercise date.

About ________ of all futures contracts are settled by physical delivery of foreign exchange between buyer and seller.

The price of an option is always somewhat greater than its intrinsic value,since there is always some chance that the intrinsic value will rise between the present and the expiration date.

The maximum gain for the purchaser of a call option contract is while the maximum loss is .

Multinational Financial Management: Opportunities and Challenges

The International Monetary System

The Balance of Payments

Financial Goals and Corporate Governance

The Foreign Exchange Market

International Parity Conditions

Interest Risk and Swaps

Foreign Exchange Rate Determination

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

International Trade Finance

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

Exam 7: Foreign Currency Derivatives: Futures and Options

The major difference between currency futures and forward contracts is that futures contracts are standardized for ease of trading on an exchange market whereas forward contracts are specialized and tailored to meet the needs of clients.

Foreign currency options are available both over-the-counter and on organized exchanges.

A trader who is buying options of longer maturities will pay more,and proportionately more,for the longer maturity options.

The sensitivity of the option premium to a small change in the spot exchange rate is called the gamma.

A call option whose exercise price exceeds the spot price is said to be:

For a $1.50/£ call option with an initial premium of $0.033/£ and a rho value of 0.2,after an increase in the U.S.dollar rate from 8% to 9% - the new ATM optiom premium would be:

A trader who is purchasing a call option on foreign currency should do so before the domestic interest rate rises.

Why are foreign currency futures contracts more popular with individuals and banks while foreign currency forwards are more popular with businesses?

As an option moves further in-the-money delta moves toward _______.

The value of a European style call option is the sum of two components:

Define and explain the logic for the time value of an option.Explain the value of the time value of an option for deep out-of-the money and deep in-the-money options.

Which of the following is NOT a factor in determining the premium price of a currency option?

The buyer of a long call option:

Traders who believe volatilities will fall significantly in the near-term will:

The Delta of an option is defined as:

The buyer (long)of a put option:

An ________ option can be exercised only on its expiration date,whereas a/an ________ option can be exercised anytime between the date of writing up to and including the exercise date.

About ________ of all futures contracts are settled by physical delivery of foreign exchange between buyer and seller.

The price of an option is always somewhat greater than its intrinsic value,since there is always some chance that the intrinsic value will rise between the present and the expiration date.

The maximum gain for the purchaser of a call option contract is ________ while the maximum loss is ________.

Multinational Financial Management: Opportunities and Challenges

The International Monetary System

The Balance of Payments

Financial Goals and Corporate Governance

The Foreign Exchange Market

International Parity Conditions

Interest Risk and Swaps

Foreign Exchange Rate Determination

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

International Trade Finance

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

An option can be exercised only on its expiration date,whereas a/an option can be exercised anytime between the date of writing up to and including the exercise date.

The maximum gain for the purchaser of a call option contract is while the maximum loss is .