By convention, a swap buyer on an interest rate swap agrees to A. periodically pay a addressed rate of interemainder and also obtain a floating rate of interemainder.B. periodically pay a floating rate of interemainder and receive a addressed price of interemainder.C. swap both principle and interemainder at contract maturity.D. earlier both sides of the swap agreement.E. act as the dealer in the swap agreement.
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Which of the following is true? A. Forward contracts have actually no default risk.B. Futures contracts call for an initial margin need be phelp.C. Forward contracts are marked to sector daily.D. Forward contract buyers and also sellers execute not know that the counterparty is.E. Futures contracts are only traded over the counter.
You have agreed to deliver the underlying commodity on a futures contract in 90 days. Today the underlying commodity price rises and also you gain a margin speak to. You should have actually A. a lengthy place in a futures contract.B. a brief place in a futures contract.C. sold a forward contract.D. purchased a forward contract.E. purchased a speak to option on a futures contract.
A contract that offers the holder the right to market a defense at a precollection price just immediately prior to contract expiration is a(n) A. Amerideserve to call optionB. European speak to optionC. Amerideserve to put optionD. European put optionE. knockout option
A speculator may write a put alternative on stock through an exercise price of $15 and also earn a $3 premium only if they believed A. the stock price would remain over $12.B. the stock volatility would increase.C. the stock price would certainly loss below $18.D. the stock price would certainly stay above $15.E. the stock price would rise above $18 or fall listed below $12.
You have actually taken a stock alternative place and if the stock"s price drops you will gain a level obtain no issue how far prices autumn, however you could go bankrupt if the stock"s price rises. You have: A. bought a contact choice.B. bought a put choice.C. written a call alternative.D. created a put choice.E. written a straddle.
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You have actually taken a stock choice place and also if the stock"s price rises you could shed a fixed little amount of money, however if the stock"s price decreases your gain rises. You need to have ________________________________. A. bought a contact optionB. bought a put optionC. created a contact optionD. written a put optionE. purchased a straddle
In a bear sector, which choice positions make money?I. Buying a callII. Writing a callIII. Buying a putIV. Writing a put A. I and also IIB. I and IIIC. II and IVD. II and also IIIE. I and IV
The greater the exercise price, the ________________ the worth of a put and the _______________ the worth of a contact. A. higher; higherB. lower; lowerC. higher; lowerD. lower; higher
A stock has actually a spot price of $55. Its May alternatives are around to expire. One of its puts is worth $5 and also among its calls is worth $10. The exercise price of the put must be ______________ and also the exercise price of the call have to be ________________. A. $50; $45B. $55; $55C. $60; $45D. $60; $50E. One cannot tell from the information offered.
An agreement between 2 parties to exreadjust a collection of mentioned routine cash flows later based on some underlying instrument or price is a(n) A. forward agreementB. futures contractC. interest rate collarD. choice contractE. swap contract
An investor is committed to purchasing 100 shares of World Port Management stock in six months. She is worried the stock price will certainly increase substantially over the next 6 months. The stock is at $45 and she buys a 6-month speak to through a strike of $50 for $250. At expiration the stock is at $54. What is the net economic obtain or loss on the whole stock/alternative portfolio? A. -$500B. -$750C. -$900D. $400E. $500
A financial institution through momentary floating-price assets funded by irreversible fixed-rate liabilities might hedge this risk byI. buying a T-bond futures contract.II. buying alternatives on a T-bond futures contract.III. entering into a swap agreement to pay a resolved rate and get a variable rate.IV. entering into a swap agreement to pay a variable rate and obtain a resolved rate. A. I and also III onlyB. I, II, and also IV onlyC. II and IV onlyD. III onlyE. IV only
A bank via permanent fixed-price assets funded through temporary rate-sensitive liabilities could perform which of the complying with to limit their interemainder rate risk?I. Buy a cap.II. Buy an interest rate swap.III. Buy a floor.IV. Sell an interest price swap. A. I and II onlyB. III onlyC. I and IV onlyD. II and III onlyE. III and IV only
An interemainder rate floor is designed to safeguard an college fromI. falling interemainder rates.II. falling bond prices.III. increased credit danger on loans.IV. swap counterparty crmodify danger. A. I and IVB. II and also IIIC. I and also IIID. II and IVE. I only
My bank has a larger number of adjustable-rate mortgage loans superior. To defend our interest price income on these loans the bank couldI. enter right into a swap to pay fixed and also obtain variable.II. enter right into a swap to pay variable and get resolved.III. buy an interest rate floor.IV. buy an interest price cap. A. I and also III onlyB. I and also IV onlyC. II and also III onlyD. II and IV only
A contract wbelow the buyer agrees to pay a stated interemainder price on a loan wright here the loan will be originated at some future time is dubbed a(n) A. forward price agreementB. futures loanC. alternative on a futures contractD. interest rate swap contractE. money swap contract
A bank lender is pertained to around the creditworthiness of one of its major borrowers. The financial institution is considering utilizing a swap to reduce its crmodify expocertain to this customer. Which type of swap would finest accomplish this need? A. Interemainder rate swapB. Currency swapC. Equity linked swapD. Crmodify default swapE. DIF swap
The type of swap most closely connected to the subprime mortgage crisis is the ____________. A. interemainder price swapB. currency swapC. equity connected swapD. crmodify default swapE. DIF swap
Online Learning Center to acfirm Essentials of Investments8th EditionAlan J. Marcus, Alex Kane, Zvi Bodie