Midterm Key - Midterm Exam Financial Markets in the Global...

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Midterm Exam Financial Markets in the Global Society February 17, 2011 Name_____________________ 1) If you had a short position of 2 contracts in the EuroFx contract and your limit buy order was executed 100 ticks away (lower than where you were short), did you make or lose on this position? (Show your math!) Your math must be correct and should indicate an accurate positive or negative number to get credit ! ) 2x$12.50x100)= 2500 profit 2) We read that people tend to “ignore, reject, or minimize any information that conflicts with their positive self image.” Furthermore, it frequently happens that some investors’ memories of past performance in the market are better than the actual results due to this tendency. What is this called in our psych. text? Cognitive dissonance 3) From class discussion (and from what we’ve heard others say!), what could be considered THE best job description of a trader? Problem solver. 4) Describe the difference between a hedger and a speculator. Hedger lays off risk in the market, speculator takes risk . 5) Using a price chart with trendlines and price patterns to help predict a move in the soybean market is an example of technical analysis of a market. Using a weather forecast to help predict a move in the market is an example of what type of analysis? Fundamental Analysis 6) We watched the NOVA video, “Mind Over Matter,” As an apparent demonstration of irrational behavior, specifically what did the test group bid up to 28 dollars? A twenty dollar bill 7) In a posted resource in Course Documents/Articles/Exchange News, there is a link to “Remarks, Implementing the Dodd-Frank Act.” Who made the remarks? CFTC Chairman Gary Gensler 8) Scott Gordon mentioned 3 specific market drivers while discussing the dynamics of the marketplace. Name all three of them. . (Worth 2 questions!) Globalization, Technology, Regulation 9) Per our course packet, who once said, “the information standard has replaced the gold standard as the basis of world finance?” Walter Wriston, the former head of Citicorp (see page 27) in the course packet) 10) From the Course Packet, we read, “numerous Wall Street enemies refused to come to ________________ aid. On 13 February 1990, the bank that had epitomized the 1980’s financial culture joined its clients in bankruptcy.” Fill in the blank . Drexel Burnham Lambert (or just Drexel) 11) We read about the “self-serving bias” in a posted article. “The consequence is we sometimes filter out things we want to see.” At what University was this study made? University of Illinois
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Midterm Key - Midterm Exam Financial Markets in the Global...

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