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1. As interest rates increase, the writer of a bon...

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1. As interest rates increase, the writer of a bond call option stands to make (Points : 2) limited gains. limited losses. unlimited losses. unlimited gains. 2. A bank with a strong positive leverage adjusted duration gap can hedge their exposure to interest rate increases by entering into (Points : 2) a currency swap agreement to receive the fixed rate payment. an interest rate swap agreement to make the fixed-rate payment side of the swap. a credit swap agreement to receive the floating rate payment. a commodity swap agreement to make the fixed-rate payment side of the swap. 3. An agreement between a buyer and a seller at time 0 to exchange a standardized, prespecified asset for cash at a specified later date is characteristic of a (Points : 2) spot contract. forward contract. futures contract. put options contract. 4. A forward contract (Points : 2) has more credit risk than a futures contract. is more standardized than a futures contract. is marked to market more frequently than a futures contract. has a shorter time to delivery than a futures contract. 5. As interest rates increase, the buyer of a bond put option stands to (Points : 2) make limited gains. incur limited losses. incur unlimited losses. lose the entire premium amount. 6. Swapping an obligation to pay interest at a specified fixed or floating rate for payments representing the total return on a loan or a bond of a specified amount is an example of (Points : 2) a commodity swap. a credit swap. a currency swap. an equity swap. 7. A contract whose payoff increases as a yield spread increases above some stated exercise spread is a (Points : 2) put option. call option. digital default option. credit spread call option. 8. The current price of June $100,000 T-Bonds trading on the Chicago Board of Trade is 109.24. What is the price to be paid if the contract is delivered in June? (Points : 2) $107,240. $109,240. $109,750. $110,250. $115,760. 9. An FI manager purchases a zero-coupon bond that has two years to maturity. The manager paid $76.95 per $100 for the bond. The current yield on a one-year bond of equal risk is 12 percent, and the one-year rate in one year is expected to be either 16.65 percent or 15.35 percent. Either rate is equally probable. What is the market-determined, implied one-year rate one year before maturity? (Points : 2) 27.99 percent. 13.54 percent. 29.95 percent. 16.00 percent. 10. An FI manager purchases a zero-coupon bond that has two years to maturity. The manager paid $76.95 per $100 for the bond. The current yield on a one-year bond of equal risk is 12 percent, and the one-year rate in one year is expected to be either 16.65 percent or 15.35 percent. Either rate is equally probable. What is the expected sale price if the bond has to be sold at the end of one year? (Points : 2) $84.00. $85.99. $86.20. $85.74.

 

Paper#6961 | Written in 18-Jul-2015

Price : $25
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