Saint Cloud State University Foreign Exchange Markets and Rates Answers

1. What is a derivative security? (LG 10-1, LG 10-4, LG 10-7)
2. What are the differences between a spot contract, a forward contract, and a futures contract? (LG 10-1)
3. What are the functions of floor brokers and professional traders on the futures exchanges? (LG 10-2)
4. What is the purpose of requiring a margin on a futures or option transaction? What is the difference between an initial margin and a maintenance margin? (LG 10-2)
5. When is a futures or option trader in a long versus a short position in the derivative contract? (LG 10-2)
6. What is the meaning of a Treasury bond futures price quote of 103-13? (LG 10-3)
7. Refer to Table 10-4. (LG 10-3) a. If you think 15-year Treasury note prices will fall between August 7, 2013, and March 2014, what type of futures position would you take? b. If you think inflation in Japan will increase by more than that in the United States between August 2013 and December 2013, what type of futures position would you take? c. If you think stock prices will fall between August 2013 and December 2013, what type of position would you take in the December S&P 500 Index futures contract? What happens if stock prices actually rise?
8. What is an option? How does an option differ from a for ward or futures contract? (LG 10-4)
9. What is the difference between a call option and a put option (/G /01)
10. What must happen to the price o the underlying T bond lutures contrct for the purchaser of a call optien on T-bond
11. What must happen to the price of the underlying stock for the purchaser of a put option How does the writer of the put option make money’? (LG 10-4) on the stock to make money?
12. What are the three ways an option holder can er her position? (LG 104) liquidate his

Ch 19
13. What are foreign exchange markets and foreign exchange rates? Why is an understanding of foreign exchange markets important to financial managers and individual investors? (LG 9-1)

14.If the Swiss franc is expected to depreciate in the near future, would a U.S.-based FI in Bern City prefer to be net long or net short in its asset positions? Discuss. (LG 9-1)

15. How did the Bretton Woods and the Smithsonian Agreements allocate the ability of foreign exchange rutes to float freely How did the elimination of exchange bundariestn 1973 acetic the ability of foreign exchange rates to float freely?
16.what motivates FIs to hedge foreign currency exposures? what are the limitations to hedging foreign currency exposure ?
17.What are the two primary methods of hedging FX risk for an FI? What two conditions are necessary to achieve a per- fact hedge through on-balance-sheet hedging? What are the advantages and disadvantages of off-balance-sheet hedging in comparison to on-balance-sheet hedging? (LG 9-5)
18.If international capital markets are well integrated and oper- ate efficiently, will Fls be exposed to foreign exchange risk? What are the sources of foreign exchange risk for FIs? (LG 9-5)
19.Explain the concept of interest rate parity. What does this concept imply about the long-run profit opportunities from investing in international markets? What market conditions must prevail for the concept to be valid?
20.One forms of the interest rate parity equation appears as 1 +se d/s)x+r)xt where both the spot and forward rates are expressed in terms of dollars for pounds or diret eachange rates How would the equation be what ten if the exchange rates were indirect-that is pounds for dollars?

21. In 1992 hedge fund manager George Soros sold short more than 10 billion British Pounds, a bet which eventually earned him a $1 billion profit. How did he accomplish this feat?
22. In 2008 Credit Default Swaps were traded OTC in a dark and nearly unregulated market. How does this differ from Put Options listed on the CBOE in terms of regulations and transparency?
23. Both the capital asset pricing model and the arbitrage pricing theory rely on the proposition that a no-risk, no-wealth investment should, on average, no return. Explain why this should be the case, being sure to describe briefly the similarities and differences between the CAPM and the APT. Also, using either of these theories, explain how superior investment performance can be established.
24. How might a jewelry store and a grocery store differ in terms of asset turnover and profit margin? Would you expect their return on assets to differ assuming equal business risk? Discuss.

You can leave a response, or trackback from your own site.


9 Responses to “Saint Cloud State University Foreign Exchange Markets and Rates Answers”

  1. Black Ops Zombies… […]some people still have not played this game. It’s hard to imagine or believe, but yes, some people are missing out on all of the fun.[…]…

  2. 881511 606137But wanna say that this really is invaluable , Thanks for taking your time to write this. 846701

  3. 706203 767633I dugg some of you post as I cogitated they were really beneficial invaluable 161359

  4. 657222 937963Its perfect time to make some plans for the future and it is time to be happy. Ive read this post and if I could I wish to suggest you some intriguing items or suggestions. Possibly you can write next articles referring to this write-up. I want to read even a lot more points about it! 434179

  5. 361789 512443This is the suitable blog for anybody who needs to seek out out about this subject. You notice so a lot its virtually laborious to argue with you (not that I genuinely would wantHaHa). You undoubtedly put a brand new spin on a subject thats been written about for years. Excellent stuff, just excellent! 235878

  6. Alden Ruckey says:

    2015 I had a new room in 2015.

  7. My country is in the hospitalProtect your wrists and find them.

  8. Switzerland was built in 1832. In 1832

  9. 173341 629141An attention-grabbing dialogue is worth comment. I believe that it is greatest to write extra on this topic, it wont be a taboo topic even so usually individuals are not sufficient to speak on such topics. Towards the next. Cheers 653471

Leave a Reply

Powered by WordPress | Designed by: buy backlinks | Thanks to webdesign berlin, House Plans and voucher codes