CH23AQZV7 - Chapter 23 Quiz A Student Name 1 Student ID A financial asset that represents a claim to another financial asset is called a(n security

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Chapter 23 Quiz A Student Name _________________________ Student ID ____________ ________ 1. A financial asset that represents a claim to another financial asset is called a(n) _____ security. a. hedged b. future c. derivative d. secondary ________ 2. The primary purpose of a hedge is to: a. reduce rate or price fluctuations. b. create a financially engineered security. c. increase the potential maximum rate of return. d. increase the potential cash flows of a project. ________ 3. A plot showing the gains and losses on a contract which result from unexpected price changes is called a: a. hedge. b. payoff profile. c. risk matrix. d. financially engineered graph. ________ 4. Which one of the following statements is correct? a. Marking-to-market is the term which applies to the daily resettlement feature found in a forward contract. b. A futures contract is exactly the same as a forward contract. c. Using a contract on a related, but not identical, asset as a means of hedging is called cross-rating. d. A currency swap contract is an agreement to exchange currencies on specific dates in the future. ________ 5. If you buy a put option, you have the _____ to _____ the underlying asset at a specified price. a. right; buy b. right; sell c. obligation; buy d. obligation; sell ________ 6. If you buy a call, you will profit if the price of the underlying asset: a. equals the strike price. b. decreases. c. remains constant. d. increases. ________ 7. A put option on an interest rate is referred to as a: a. cap. b. collar. c. neck. d. floor. Use this information to answer questions 8 through 10. Oats (CBT)-5,000 bu.; cents per bu. Open High Low Settle Chg Lifetime High Lifetime Low Open Interest Sep 139.00 140.50 137.25 137.25 -1.25 190.00 134.00 3,373 Dec 146.00 148.00 143.50 144.00 -1.50 193.00 141.00 6,758 ________ 8. What is the closing value on one oats December futures contract? a. $6,863 b. $7,175 c. $7,200 d. $7,300 ________ 9. What is the highest price at which one September futures contract on oats has traded? a. $1.405
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This note was uploaded on 05/29/2010 for the course FIN 325 taught by Professor Staff during the Spring '08 term at San Diego State.

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CH23AQZV7 - Chapter 23 Quiz A Student Name 1 Student ID A financial asset that represents a claim to another financial asset is called a(n security

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