Chapter 23 Futures and Swaps

Chapter 23 Futures - Chapter 23 Futures and Swaps Markets and Applications Multiple Choice Questions 1 Which one of the following stock index

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Chapter 23 Futures and Swaps: Markets and Applications Multiple Choice Questions 1. Which one of the following stock index futures has a multiplier of $250 times the index value? A) Russell 2000 B) S&P 500 Index C) Nikkei D) DAX-30 E) NASDAQ 100 Answer: B Difficulty: Easy Rationale: The multiplier is used to calculate contract settlements. See Table 23.1. 2. Which one of the following stock index futures has a multiplier of $10 times the index value? A) Russell 2000 B) Dow Jones Industrial Average C) Nikkei D) DAX-30 E) NASDAQ 100 Answer: B Difficulty: Easy Rationale: The multiplier is used to calculate contract settlements. See Table 23.1. 3. Which one of the following stock index futures has a multiplier of $500 times the index value? A) Russell 2000 B) FTSE 100 C) Nikkei D) DAX-30 E) NASDAQ 100 Answer: A Difficulty: Easy Rationale: The multiplier is used to calculate contract settlements. See Table 23.1. 72
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Chapter 23 Futures and Swaps: Markets and Applications 4. Which one of the following stock index futures has a multiplier of $100 times the index value? A) Russell 2000 B) S&P 500 Index C) Nikkei D) DAX-30 E) NASDAQ 100 Answer: E Difficulty: Easy Rationale: The multiplier is used to calculate contract settlements. See Table 23.1. 5. Which one of the following stock index futures has a multiplier of 10 euros times the index? A) CAC 40 B) DJ Euro Stoxx - 50 C) Nikkei D) DAX-30 E) A and B Answer: E Difficulty: Easy Rationale: The multiplier is used to calculate contract settlements. See Table 23.1. 6. You purchased one S&P 500 Index futures contract at a price of 950 and closed your position when the index futures was 947, you incurred: A) a loss of $1,500. B) a gain of $1,500. C) a loss of $750. D) a gain of $750. E) None of the above. Answer: C Difficulty: Moderate Rationale: (-$950 + $947) X 250 = - $750. 7. You took a short position in two S&P 500 futures contracts at a price of 910 and closed the position when the index futures was 892, you incurred: A) a gain of $9,000. B) a loss of $9,000. C) a loss of $18,000. D) a gain of $18,000. E) None of the above. Answer: A Difficulty: Easy Rationale: ($910 - $892) X 250 X 2 = $9,000 73
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Chapter 23 Futures and Swaps: Markets and Applications 8. If a stock index futures contract is overpriced, you would exploit this situation by: A) selling both the stock index futures and the stocks in the index. B) selling the stock index futures and simultaneously buying the stocks in the index. C) buying both the stock index futures and the stocks in the index. D) buying the stock index futures and selling the stocks in the index. E) None of the above. Answer: B Difficulty: Moderate Rationale: If one perceives one asset to be overpriced relative to another asset, one sells the overpriced asset and buys the other one. 9.
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This note was uploaded on 05/09/2011 for the course MGMT 223 taught by Professor Zhenxi during the Spring '11 term at HKU.

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Chapter 23 Futures - Chapter 23 Futures and Swaps Markets and Applications Multiple Choice Questions 1 Which one of the following stock index

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