8 Solved Questions on Financial Markets and Institution - Homework | FINA 4400, Assignments of Financial Market

Download 8 Solved Questions on Financial Markets and Institution - Homework | FINA 4400 and more Assignments Financial Market in PDF only on Docsity! FINA 4400 Additional Examples: Chapter 10 1. You have agreed to deliver the underlying commodity on a futures contract in 90 days. Today the underlying commodity price rises and you get a margin call. You must have A. A long position in a futures contract B. A short position in a futures contract C. Sold a forward contract D. Purchased a forward contract E. Purchased a call option on a futures contract 2. A speculator may write a put option on stock with an exercise price of $15 and earn a $3 premium only if they thought A. The stock price would stay above $12 B. The stock volatility would increase C. The stock price would fall below $18 D. The stock price would stay above $15 E. The stock price would rise above $18 or fall below $12 3. In a bear market which option positions make money? I. Buying a call II. Writing a call III. Buying a put IV. Writing a put A. I and II B. I and III C. I and IV D. II and III E. I and IV 4. A stock has a spot price of $55. Its May options are about to expire. One of its puts is worth $5 and one of its calls is worth $10. The exercise price of the put must be _____ and the exercise price of the call must be _____. A. 50, 45 B. 55, 55 C. 60, 45 D. 60, 50 E. One cannot tell from the information given