1- In a statistical hedge using futures a hedge ratio of positive two implies which of the following:
a- The future position should be twice as large as the spot position.
b- The spot position should be twice as large as the futures position.
c- When hedging an outflow you should short futures
d- Two of the above
e- None of the above
2- _________ is an expected change in the relationship between currency futures and currency spot prices.
a- Exchange rate risk.
b- Currency risk
c- Basis or basic risk.
d- Interest rate risk
e- None of the above
3- Disadvantage of currency futures contracts relative to forward contracts including?
a- The ability to trade only in limited currency
b- Limited availability of delivery dates
c- Freedom to liquidate the contracts at any time before its maturity
d- More than one of the above
e- None of the above
4- which of the following concerning futures contracts is true?
a- An exchange clearinghouse takes one side of every transaction.
b- initial margin and a maintenance margin are required.
c- Futures contracts are marked-to-market on a daily basis.
d- Future contracts have no default risk.
e- All of the above are true