Quiz
Chapter 8
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Questions in this quiz (12)
11) A put option to sell 62,500 pounds in 3 months for a strike price of $0.92 per pound has a premium of 1.52 US cents per euro. If the spot rate on the expiration date of the option is $0.90 per pound what is the overall profit or loss to the buyer of the put.
- A$300
- B$950
- C-1250
- DZero
22) A foreign currency _______ option give the holder the right to ________ a foreign currency whereas a foregone currency ________ option give the holder the right to _________ an option.
- Aput,hold,call,release
- Bcall,sell,put,buy
- Ccall,buy,put,sell
- Dnone of the above
33) Peter thinks that the UK pound will cost $1.43/pounds in 6 months. A 6-month currency futures contract is available today at a rate of $1.44/pound.
If Peter was to speculate in the currency futures market and his expectations are correct, which of the following strategies would earn him a profit?- ASell a pound currency futures contract
- BSell pounds today
- CBuy a pound currency futures contract
- DSell pounds in six months
- ASell a pound currency futures contract
44) Whats the intrinsic value of a put option on the British pound with the strike price of $1.45 when the pound spot rate is $1.46 per pound
- A-0.01 dollars per pound
- B+ 0.01 dollar per pound
- CZero
- D+0.0069 dollars per pound
55) Futures contracts require that the purchaser deposit an initial sum as collateral. This deposit is called a
- Amargin
- Bmarked market sum
- Csettlement
- Dcollateralized deposit
66) A speculator that has _____ a futures contract has taken a ______ position.
- Apurchased;short
- Bpurchased;sold
- Csold;short
- Dsold;long
77) A put option with the strike price less than the current spot rate is out of the money.
- ATrue
- BFalse
88)The writer of the option is referred to as the seller, and the buyer of the option is referred to as the holder.
- ATrue
- BFalse
99)The value of a financial derivative is derived from the value of an underlying asset.
- ATrue
- BFalse
1010) Foreign currency options are available both over-the-counter and on organized exchanges.
- ATrue
- BFalse
1111)The major difference between CURRENCY FUTURES and FORWARD CONTRACTS is that
FUTURE CONTRACTS are standardized for ease of trading on an exchange market;
whereas
FORWARD CONTRACTS are specialize and tailored to meet the needs of clients.- ATrue
- BFalse
1212) Currency Futures are typically written by large banks.
- ATrue
- BFalse
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- Quiz on Chapter 8 , created by lauratorres0723 on 07/12/2014.
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- lauratorres0723
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- English
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