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1、INTERNATIONAL FINANCEAssignment Problems (6) Name: Student#: I. Choose the correct answer for the following questions (only correct answer) (3 credits for each question, total credits 3 x 20 = 60)1. Which of the following is NOT true regarding forward contracts?A. The maturity of forward contracts i
2、s flexible.B. Forward contracts are traded both on organized exchanges and OTC market.C. Forward contracts are used to speculate the discrepancies of the exchange rates.D. The size of a forward contract is usually much larger than that of the futures or options.2. Which of the following is NOT a con
3、tract specification for currency futures trading on an organized exchange?A. maturity dateB. maintenance margin requirementC. size of the contractD. All of the above are specified3. A futures contract is very similar to a forward contract, because _.A. both are agreements between two parties to deli
4、ver relative currencies at a certain time for a certain priceB. both are standardized contractsC. both can be used to eliminate the default riskD. both are required to physically deliver the underlying currency4. If the amount in the margin account drops below the maintenance margin, the futures con
5、tract holder will _.A. close out the contractB. be issued a margin callC. write a new contractD. notify the exchange5. Which of the following is NOT a difference between a currency futures contract and a forward contract?A. The counterparty to the futures participant is unknown with the clearinghous
6、e stepping into each transaction whereas the forward contract participants are in direct contact setting the forward specifications.B. A single sales commission covers both the purchase and sale of a futures contract whereas there is no specific sales commission with a forward contract because banks
7、 earn a profit through the bid-ask spread.C. The futures contract is marked to market daily whereas a forward contract is only due to be settled at maturity.D. All of the above are differences between a currency futures contract and a forward contract.6. Assume that Citibank in New York quotes a 30-
8、day forward rate on euro of $0.7533 while the Singapore International Monetary Exchange (SIMEX) euro futures for delivery in 30 days is being quoted at $0.7522. You can make a riskless profit by _.A. taking a short position on euro in SIMEX euro futures contract and a long position on euro in the fo
9、rward contractB. taking a long position on euro in SIMEX euro futures contract and a short position on euro in the forward contractC. taking a short position on dollar in SIMEX euro futures contract and a short position on dollar in the forward contractD. taking a long position on dollar in SIMEX eu
10、ro futures contract and a long position on dollar in the forward contract7. The main function of the “Marking to market” procedure comes down to _.A. avoid default risk inherent in forward contractsB. cover risk exposure arisen from the international transactionsC. protect the contract holders from
11、suffering the lossD. all of the above8. The buyer of a futures contract is required to put a sum of money in the exchange. This sum of money is called _.A. down paymentB. initial marginC. premiumD. commission9. When reading the futures quotation in the newspaper, the column heading indicating the nu
12、mber of contracts outstanding on the previous day is called _.A. percentage changeB. settleC. open interestD. estimated volume10. A put option on Japanese yen is written with a strike price of 88/$. Which of the following spot rate maximizes your profit if you choose to execute the contract before m
13、aturity?A. 70/$B. 80/$C. 90/$D. 100/$11. The agreed price in a currency option contract is called the _.A. forward priceB. futures priceC. exercise priceD. spot price12. For a currency put option if the future spot rate is above the strike price, the option is said to be _.A. in-the-moneyB. at-the-m
14、oneyC. out-of-the-moneyD. break-even13. The writer of an option contract has _ whereas the holder has _.A. obligation; choiceB. right; responsibilityC. choice; obligationD. priority; privilege14. Assume you bought a call option with the exercise price of $1.55/ in Chicago Mercantile Exchange on Sept
15、ember 6. The contract would be expired in December. If the spot exchange rate was $1.50/ on October 10, the intrinsic value of this call option on that day would be _.A. $0.05B. -$0.05C. $0D. None of the above, because the contract doesnt expire on October 10.15. The foreign-currency accounts payable can be hedged by buying a _ option on the foreign currency, whereas accounts receivable can be hedged by buying a _ option on the foreign currency.A. call; putB. put; callC. American; European
