ch8 - ch8 Student: _ 1. A(n) _ is an agreement between a...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
ch8 Student: ___________________________________________________________________________ 1. A(n) _________________________ is an agreement between a buyer and a seller today which calls for the delivery of a particular security in exchange for cash at some future date for a set price. ________________________________________ 2. A financial institution goes _________________________ in the futures market by selling a futures contract. ________________________________________ 3. A financial institution goes _________________________ in the futures market by buying a futures contract. ________________________________________ 4. _________________________ is the difference in interest rates (or prices) between the cash market and the futures market on an underlying security. ________________________________________ 5. The_________________________ is the fee the buyer must pay to be able to put securities to or to call securities away from the option writer. ________________________________________ 6. A(n)_________________________ allows the holder the right to either sell securities to another investor (put) or buy securities from another investor (call) for a set price before the expiration date. ________________________________________ 7. Futures contracts are_________________________ daily which means that the futures contracts settled each day as the market value of the futures contracts change. ________________________________________ 8. Most options today are traded on a(n)_________________________. These options are standardized to make offsetting an existing position easier. ________________________________________ 9. A(n)_________________________ means that the buyer of the option contract is betting that the market price of the underlying security will decline in the future. ________________________________________ 10. A(n)_________________________ means that the buyer of the option contract is betting that the market price of the underlying security will increase in the future. ________________________________________ 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
11. A(n)_________________________ is where a borrower with a lower credit rating enters into an agreement with a borrower with a higher credit rating to exchange interest payments. ________________________________________ 12. In an interest rate swap, the________________________ or principal amount is not exchanged. ________________________________________ 13. A(n)_________________________ is an interest rate swap which offsets the original interest rate swap agreement. ________________________________________ 14. In an interest rate swap agreement , __________________ reduces the default risk. This is where the swap parties exchange only the net difference between interest payments owed. ________________________________________ 15. A(n)_________________________ is a contract where two parties exchange interest payments in order
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/17/2008 for the course FINA 4443 taught by Professor Mattews during the Fall '08 term at Texas A&M.

Page1 / 36

ch8 - ch8 Student: _ 1. A(n) _ is an agreement between a...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online