Intro Flashcards
1
Q
A US exporter has made a sale of goods worth €1.5m to Germany. How could he hedge his exposure to exchange rate fluctuations before the money is received? IBuy euro futures IISell euro futures IIIBuy euro calls IVBuy euro puts
AI and II BII and III CIII and IV DII and IV
A
II and IV,
He is long euros in the cash market; he needs, therefore, either to sell futures or buy puts.
2
Q
An exchange-traded option with non-standardised terms, which is centrally-cleared, is which type of option?
AA swap option BA FLEX option CAn OTC option DAn OTM option
A
A FLEX option,
This describes a flex option where the terms, such as maturity etc… are not standardised
3
Q
long put has potential for?
AUnlimited profit and unlimited loss BLimited profit and limited loss CUnlimited profit and limited loss DLosses limited to strike price plus premium
A
limited profit and limited loss
