Sib460 Full Quiz

SIB460 Going International Multiple Choice & Study Case

1. Multiple Choice

Circle the correct answer. If you change your answer, indicate the new choice to the left of the question and circle it.

1. Federal Funds are typically:

a. Loan from a dealer that is collateralized by Treasury securities.

b. Federal Reserve assets

c. Loans from the Federal Reserve to banks

d. Loans from banks to their “best” commercial customers

e. Overnight loans settled in immediately available funds

2. Eurodollars are best associated with:

a. The use of dollar currency ($100 bills) in less developed countries in Europe

b. The financing of Europeans by domestic US banks

c. The transfer of ownership of a domestic US bank deposit from a US company to a foreign based owner

d. The development of a common currency in Europe.

3. A hedger in the futures market hedges to prevent a loss in a business transaction, but also gives up:

a. A sizable fee to the exchange

b. The loss on the futures contract

c. The opportunity to gain from a favorable turn in prices of the item

d. The potential gain on the futures contract.

4. All the following are risks associated with futures contracts except: not good question

a. Margin risk

b. Basis risk

c. Price risk

d. Manipulation risk

5. What action would the holder of a maturing (expiring) call option take with an option which cost $300, had a strike price of $50 and the price of the shares was $52, if the option expires today:

a. Let the option expire unexercised

b. Exercise the option

c. Request that the $300 be returned

d. Buy more call options with a strike of $53.

6. An S&L with a high negative GAP position for the next 180 days would most likely take which action to hedge its interest rate risk:

a. Buy futures contracts

b. Sell futures contracts

c. Sell put options on futures contracts

d. Buy put options on futures contracts

e. Both b and d above

7. The value of any option varies directly with:

a....