International Financial Management by Cheol Eun 8th Edition – Test Bank

International Financial Management, 8e (Eun)
Chapter 7 Futures and Decisions on International Commerce

1) A put alternative on $15,000 with a strike price of €10,000 is comparable issue as a reputation alternative on €10,000 with a strike price of $15,000.

2) A CME contract on €125,000 with September provide
A) is an occasion of a forward contract.
B) is an occasion of a futures contract.
C) is an occasion of a put alternative.
D) is an occasion of a reputation alternative.

3) Yesterday, you entered proper right into a futures contract to buy €62,500 at $1.50 per €. Suppose the futures price closes proper now at $1.46. How lots have you ever ever made/misplaced?
A) Relies upon upon your margin steadiness.
B) You have made $2,500.00.
C) You have misplaced $2,500.00.
D) You have neither made nor misplaced money, however.

4) In reference to the futures market, a “speculator”
A) makes an try to income from a change inside the futures price.
B) needs to avoid price variation by locking in a purchase order order price of the underlying asset by method of a protracted place inside the futures contract or a product sales price by method of a short place inside the futures contract.
C) stands ready to buy or promote contracts in limitless quantity.
D) needs to avoid price variation by locking in a purchase order order price of the underlying asset by method of a protracted place inside the futures contract or a product sales price by method of a short place inside the futures contract, and as well as stands ready to buy or promote contracts in limitless quantity.

5) Evaluating “forward” and “futures” commerce contracts, we’re in a position to say that
A) they’re every “marked-to-market” every day.
B) their important distinction is in the way in which during which the underlying asset is priced for future purchase or sale: futures settle every day and forwards settle at maturity.
C) a futures contract is negotiated by open outcry between floor brokers or retailers and is traded on organized exchanges, whereas forward contract is tailor-made by a worldwide monetary establishment for its customers and is traded OTC.
D) their important distinction is in the way in which during which the underlying asset is priced for future purchase or sale: futures settle every day and forwards settle at maturity, and a futures contract is negotiated by open outcry between floor brokers or retailers and is traded on organized exchanges, whereas a forward contract is tailor-made by a worldwide monetary establishment for its customers and is traded OTC.
6) Evaluating “forward” and “futures” commerce contracts, we’re in a position to say that
A) provide of the underlying asset is seldom made in futures contracts.
B) provide of the underlying asset is often made in forward contracts.
C) provide of the underlying asset is seldom made in each contract—they’re generally cash settled at maturity.
D) provide of the underlying asset is seldom made in futures contracts and provide of the underlying asset is often made in forward contracts.

7) By which market does a clearinghouse perform a third celebration to all transactions?
A) Futures
B) Forwards
C) Swaps
D) not one of many selections

8) Inside the event of a default on one side of a futures commerce,
A) the clearing member stands in for the defaulting celebration.
B) the clearing member will search restitution for the defaulting celebration.
C) if the default is on the temporary side, a randomly chosen prolonged contract just isn’t going to receives a fee. That celebration will then have standing to impress a civil go effectively with in opposition to the defaulting temporary.
D) the clearing member stands in for the defaulting celebration and may search restitution for the defaulting celebration.

9) Yesterday, you entered proper right into a futures contract to buy €62,500 at $1.50 per €. Your preliminary effectivity bond is $1,500 and your maintenance diploma is $500. At what settle price will you get a requirement for added funds to be posted?
A) $1.5160 per €.
B) $1.208 per €.
C) $1.1920 per €.
D) $1.4840 per €.

10) Yesterday, you entered proper right into a futures contract to advertise €75,000 at $1.79 per €. Your preliminary effectivity bond is $1,500 and your maintenance diploma is $500. At what settle price will you get a requirement for added funds to be posted?
A) $1.7767 per €.
B) $1.2084 per €.
C) $1.6676 per €.
D) $1.1840 per €.

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