Multiple Choice
1. All of the following are characteristics of program trading except
a. it is portfolio trading.
b. it is computerized trading.
c. it is computerized decision making.
d. it is large block trading.
2. An automated trading system on the New York Stock Exchange is the _____ system.
a. SPOT
b. DOT
c. RAES
d. SIPC
3. A notable hedge fund failure was that of
a. Long Term Capital Management.
b. Short Term Capital Management.
c. Arbitrage Associates.
d. Parity Partners.
4. The concept of value at risk usually is based on
a. three standard deviations and one week.
b. two standard deviations and one week.
c. three standard deviations and one day.
d. two standard deviations and one day.
5. Most weather derivatives are based on
a. rainfall.
b. hurricanes.
c. temperature.
d. lightning damage.
6. A relatively new alternative to treasurers for the management of interest rate risk is a
a. rental cap.
b. contingency agreement.
c. capacity contract.
d. defeasance agreement.
7. The motivation for an equity swap is often
a. tax advantages.
b. better pricing.
c. restrictions on share ownership.
d. an absence of transaction costs.
8. FAS 133 requires
a. good faith deposits on futures contracts.
b. disclosure of option premiums paid.
c. use of derivative products for hedging purposes only.
d. marking to market of most derivative products.