INTERNATIONAL FINANCE
Assignment Problems (6) Name: Student#:
I. Choo the correct answer for the following questions (only ONE correct answer) (3 credits for each question, total credits 3 x 20 = 60)
1. Which of the following is NOT true regarding forward contracts?
A. The maturity of forward contracts is flexible.
B. Forward contracts are traded both on organized exchanges and OTC market.
C. Forward contracts are ud to speculate the discrepancies of the exchange rates.
D. The size of a forward contract is usually much larger than that of the futures or options.
2. Which of the following is NOT a contract specification for currency futures trading on an organized exchange?
A. maturity date
rotary B. maintenance margin requirement
paris C. size of the contract
D. All of the above are specified
3. A futures contract is very similar to a forward contract, becau __________.
A. both are agreements between two parties to deliver relative currencies at a certain time for a certain price
B. both are standardized contracts
C. both can be ud to eliminate the default risk
D. both are required to physically deliver the underlying currency
4. If the amount in the margin account drops below the maintenance margin, the futures c
ontract holder will __________.
A. clo out the contract
B. be issued a margin call
C. write a new contract
D. notify the exchange
5. Which of the following is NOT a difference between a currency futures contract and a forward contract?
A. The counterparty to the futures participant is unknown with the clearinghou stepping into each transaction whereas the forward contract participants are in direct contact tting the forward specifications.
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B. A single sales commission covers both the purcha and sale of a futures contract whereas there is no specific sales commission with a forward contract becau banks ear
n a profit through the bid-ask spread.
C. The futures contract is marked to market daily whereas a forward contract is only due to be ttled at maturity.
D. All of the above are differences between a currency futures contract and a forward contract.
6. Assume that Citibank in New York quotes a 30-day forward rate on euro of $0.7533 while the Singapore International Monetary Exchange (SIMEX) euro futures for delivery in 30 days is being quoted at $0.7522. You can make a riskless profit by __________.
A. taking a short position on euro in SIMEX euro futures contract and a long position on euro in the forward contract
B. taking a long position on euro in SIMEX euro futures contract and a short position on euro in the forward contract
成长的烦恼 迈克
C. taking a short position on dollar in SIMEX euro futures contract and a short position on dollar in the forward contract
D. taking a long position on dollar in SIMEX euro futures contract and a long position on dollar in the forward contract
7. The main function of the “Marking to market” procedure comes down to __________.
A. avoid default risk inherent in forward contracts
B. cover risk exposure arin from the international transactions
C. protect the contract holders from suffering the lossumo
D. all of the above
8. The buyer of a futures contract is required to put a sum of money in the exchange. This sum of money is called __________.
A. down payment
B. initial margin
C. premium
D. commission
9. When reading the futures quotation in the newspaper, the column heading indicating the number of contracts outstanding on the previous day is called __________.
A. percentage change
移动英语 B. ttle
C. open interest
D. estimated volume
10. A put option on Japane yen is written with a strike price of ¥ 88/$. Which of the following spot rate maximizes your profit if you choo to execute the contract before maturity?
A. ¥70/$
B. ¥80/$
C. ¥90/$
D. ¥100/$
11. The agreed price in a currency option contract is called the __________.
A. forward price
B. futures price
C. exerci priceveitu
D. spot price
12. For a currency put option if the future spot rate is above the strike price, the option is said to be __________.
A. in-the-money
B. at-the-money
C. out-of-the-moneymarry是什么意思
D. break-even
13. The writer of an option contract has __________ whereas the holder has __________.
A. obligation; choice
B. right; responsibility
C. choice; obligation
newarrival D. priority; privilege
