2 0 2 6 jimmy deininger frm can invest in usd at 4 or

$2.
$0.
-$2.
$6.
Jimmy Deininger, FRM can invest in USD at 4%, or he can invest in Swiss francs (CHF) at 4.25%. Deininger is a U.S. resident,
and the current spot rate is 1.03 USD/CHF. Using the interest rate parity theorem, calculate the 1-year forward rate expressed in
USD/CHF:
1.0158.
1.0267.
0.9956.
1.0275.
Which of the following best explains put-call parity?
A stock can be replicated using any at the money call and put options and a bond.
No arbitrage requires that only the underlying stock can be synthetically replicated using at the money call
and put options and a zero coupon bond with a face value equal to the strike price of the options.
A stock can be replicated using any call option, put option and bond.
No arbitrage requires that using any three of the four instruments (stock, call, put, bond) the fourth can be
synthetically replicated.
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Question #45 of 85
Question ID: 439190
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Question #46 of 85
Question ID: 439928
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Question #47 of 85
Question ID: 439223
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Question #48 of 85
Question ID: 439218
If a domestic bank is assisting a customer in the buying and selling of foreign currencies in conjunction with that customer's
particular business transaction, how would the bank's role be best described?
The bank would not assume any foreign exchange rate risk itself, and would serve as an agent for
the customer.
The bank would share in the foreign exchange rate risk along with serving as an agent for the
customer.
The bank would assume the entire foreign exchange rate risk, as well as serve as agent for the
customer.
The bank would offset the foreign currency exposure for hedging purposes.
The buyer of a straddle on a stock is most likely to benefit:
under all conditions because the straddle is guaranteed a risk-free rate of return.
if the volatility of the underlying asset's price increases.
if the volatility of the underlying asset's price decreases.
if the position expires worthless.
A call option where early exercise is restricted to certain dates is an example of a(n):
chooser option.
Asian option.
lookback option.
Bermudan option.
Which of the following commodities is an example of constant production and seasonal demand?
Natural gas.
Wheat.
Corn.
Gold.
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Question #49 of 85
Question ID: 439240
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Question #50 of 85
Question ID: 439929
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Question #51 of 85
Question ID: 439228
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Question #52 of 85
Question ID: 440960
Suppose the owner of a commodity decides to lend out the commodity. If the commodity has a continuously compounded
convenience yield of c , proportional to the value of the commodity, which of the following best represents the lowest forward
price?
How can a bank control the scale of its foreign exchange exposure?
Matching duration of assets and liabilities.
Trading foreign currencies and acting as an agent for customers.
On-balance-sheet hedging and off-balance sheet hedging.