4520-exam1-practice

4520-exam1-practice - FIN4520 Practice Exam 1 Dr. Lucy...

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Practice Exam 1 Dr. Lucy Ackert 100 possible points Formula sheet permitted (one-side of a sheet of paper, only formulas) Part 1: Multiple Choice (3 points each) Circle the correct answer. If more than one answer is circled, the answer is incorrect. 1. The cash prices of six-month and one-year Treasury bills are 99.5 and 99.0, respectively. Assume a face value of $100. What is the six-month spot rate? a. 0.005 b. 0.01 c. 0.02 d. 0.025 e. 0.05 2. As in question 1, the cash prices of six-month and one-year Treasury bills are 99.5 and 99.0, respectively. What is the one-year spot rate? a. 0.005 b. 0.01 c. 0.02 d. 0.025 e. 0.05 3. A trader enters into a one-year long forward contract to buy an asset for $60 when the spot price is $57. The spot price in one year proves to be $61. What is the trader’s gain or loss? a. $3 gain b. $1 loss c. $1 gain d. $4 gain e. $3 loss 4. On the floor of a futures exchange one futures contract is traded where both the long and short parties are closing existing positions. What is the resultant change in open interest? a. up 1
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4520-exam1-practice - FIN4520 Practice Exam 1 Dr. Lucy...

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