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Question
Currency options traded in the over-the-counter market are:a. Standardized options.
b. Customized options.
c. Liquid options.
d. Common options.
e. None of the above.
Answer
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Related questions
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When the futures option is exercised:a. The futures price for the futures contract will be set equal to the exercise price.b. The position of the two parties is immediately marked-to-market based on the then current futures price.c. The economic benefits from exercising the option are realized by the option holder.d. a and b only.e. All of the above.
Q:
If the shape of the yield curve is upward sloping and the cost of carry is positive, the futures price will trade at a:a. Discount to the cash price.b. Premium to the cash price.c. Be equal to the cash price.d. Cannot be determined.e. None of the above.
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Outside of the U.S. inflation-indexed bonds are known as:a. TIPS.b. HICPS.c. Indexers.d. Linkers.e. None of the above.
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The coupon rate on a floating-rate note may be:a. LIBOR.b. A stated margin.c. The bid on LIBOR.d. A spread over LIBID.e. The arithmetic average of LIBOR and LIBID.
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Explain the different types of external and internal credit enhancements.
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If the Swiss franc price of the dollar increases:a. The Swiss franc appreciated.b. The dollar appreciated.c. The Swiss franc depreciated.d. b and c only.e. None of the above.
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An indirect quote is the:a. Number of units of foreign currency needed to acquire one unit of the local currency.b. Number of units of local currency needed to acquire one unit of the foreign currency.c. Reciprocal of a direct quote.d. a and c only.e. None of the above.
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In an interest rate swap, the position of the floating-rate payer is equivalent to a:a. Long position in a fixed-rate bond and a short position in a floating rate bond.b. Long position in a floating-rate bond and a short position in a fixed-rate bond.c. Long position in a fixed-rate bond and a long position in a floating rate bond.d. Short position in a fixed rate bond and a long position in a floating rate bond.e. None of the above.
Q:
Commercial banks and investment banks customize for their clients interest rate contracts that are useful for:a. Index arbitrage.b. Controlling risk.c. Taking positions in markets.d. b and c only.e. None of the above.
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