货币银行学 章节题库 ch14

ECON320Chapter 14 Practice Test Professor C. James Hueng1)A tool for managing interest rate risk that requires exchange of payment streams is aA)macro hedge.B)futures contract.C)swap.D)forward contract.E)micro hedge.2)A financial contract that obligates one party to exchange a set of payments it owns for another set of paymentsowned by another party is called aA)hedge.B)swap.C)call option.D)put option.3)A swap that involves the exchange of one set of interest payments for another set of interest payments is calleda(n)A)currency swap.B)national swap.C)swaptions.D)interest rate swap.4)If Second National Bank has more rate-sensitive assets than rate-sensitive liabilities, it can reduce interest raterisk with a swap that requires Second National toA)receive fixed rate while paying floating rate.B)both receive and pay fixed rate.C)pay fixed rate while receiving floating rate.D)both receive and pay floating rate.5)If Second National Bank has more rate-sensitive liabilities then rate-sensitive assets, it can reduce interest raterisk with a swap that requires Second National toA)pay fixed rate while receiving floating rate.B)receive fixed rate while paying floating rate.C)both receive and pay fixed rate.D)both receive and pay floating rate.6)If a bank has more rate-sensitive assets than rate-sensitive liabilitiesA)it reduces interest rate risk by swapping rate-sensitive income for fixed rate income.B)it increases interest rate risk by swapping rate-sensitive income for fixed rate income.C)it reduces interest rate risk by swapping fixed rate income for rate-sensitive income.D)it cannot reduce its interest rate risk.E)it neutralizes interest rate risk by receiving and paying fixed-rate streams.7)Financial derivatives includeA)bonds.B)futures.C)stocks.D)none of the above.8)By hedging a portfolio, a bank managerA)reduces interest rate risk.B)increases the probability of gains.C)increases exchange rate risk.D)increases reinvestment risk.9)Hedging risk for a long position is accomplished byA)taking a neutral position.B)taking another long position.C)taking a short position.D)taking additional long and short positions in equal amounts.E)none of the above.10)A contract that requires the investor to buy securities on a future date is called aA)cross.B)short contract.C)hedge.D)long contract.11)A person who agrees to buy an asset at a future date has goneA)short.B)even.C)long.D)ahead.E)back.12)A short contract requires that the investorA)hedge in the future.B)buy securities in the future.C)close out his position in the future.D)sell securities in the future.13)If a bank manager chooses to hedge his portfolio of treasury securities by selling futures contracts, heA)gives up the opportunity for gains.B)removes the chance of loss.C)increases the probability of a gain.D)both A and B are true.14)To say that the forward market lacks liquidity means thatA)forward contracts usually result in losses.B)forward contracts cannot be sold for cash.C)it may be difficult to make the transaction.D)forward contracts cannot be turned into cash.E)none of the above.15)A disadvantage of a forward contract is thatA)these contracts have default risk.B)the forward market suffers from lack of liquidity.C)it may be difficult to locate a counterparty.D)all of the above.E)both A and C of the above.16)The advantage of forward contracts over futures contracts is that theyA)have lower default risk.B)are standardized.C)are more flexible.D)both A and B are true.17)Forward contracts are of limited usefulness to financial institutions becauseA)of default risk.B)it is impossible to hedge risk.C)of lack of liquidity.D)all of the above.E)both A and C of the above.18)Futures contracts are regularly traded on theA)American Stock Exchange.B)Chicago Board of Options Exchange.C)New York Stock Exchange.D)Chicago Board of Trade.19)Hedging in the futures marketA)eliminates the opportunity for gains.B)eliminates the opportunity for losses.C)increases the earnings potential of the portfolio.D)does all of the above.E)does both A and B of the above.20)When interest rates fall, a bank that perfectly hedges its portfolio of Treasury securities in the futures marketA)has no change in its income.B)suffers a loss.C)experiences a gain.D)none of the above.21)Futures markets have grown rapidly because futuresA)have lower default risk.B)are standardized.C)are liquid.D)all of the above.22)Parties who have bought a futures contract and thereby agreed to _____ (take delivery of) the bonds are said tohave taken a ____ position.A)sell; short B)sell; long C)buy; short D)buy; long23)By selling short a futures contract of $100,000 at a price of 115 you are agreeing to deliverA)$115,000 face value securities for $110,000.B)$115,000 face value securities for $115,000.C)$100,000 face value securities for $100,000.D)$100,000 face value securities for $115,000.24)By buying a long $100,000 futures contract for 115 you agree to payA)$86,956 for $115,000 face value bonds.B)$100,000 for $115,000 face value bonds.C)$115,000 for $100,000 face value bonds.D)$86,956 for $100,000 face value bonds.25)If you purchase a $100,000 interest-rate futures contract for 110, and the price of the Treasury securities on theexpiration date is 106A)your loss is $6000.B)your profit is $4000.C)your loss is $4000.D)your profit is $6000.E)your profit is $10,000.26)If you sell a $100,000 interest-rate futures contract for 105, and the price of the Treasury securities on theexpiration date is 108A)your profit is $5000.B)your profit is $3000.C)your profit is $8000.D)your loss is $3000.E)your loss is $8000.27)If you sold a short contract on financial futures you hope interest ratesA)rise.B)fall.C)are stable.D)fluctuate.28)If you bought a long futures contract you hope that bond pricesA)rise.B)fall.C)are stable.D)fluctuate.29)If you sold a short futures contract you will hope that bond pricesA)rise.B)fall.C)are stable.D)fluctuate.30)To hedge the interest rate risk on $4 million of Treasury bonds with $100,000 futures contracts, you would needto purchase contracts.A)25B)4C)40D)400E)2031)If you sell twenty-five $100,000 futures contracts to hedge holdings of a Treasury security, the value of theTreasury securities you are holding isA)$25,000,000.B)$5,000,000.C)$1,000,000.D)$2,500,000.E)$250,000.32)Futures differ from forwards because they areA)used in both financial and foreign exchange markets.B)used to hedge portfolios.C)used to hedge individual securities.D)a standardized contract.33)Assume you are holding Treasury securities and have sold futures to hedge against interest rate risk. If interestrates riseA)both the securities and the futures contracts increase in value.B)the increase in the value of the securities equals the decrease in the value of the futures contracts.C)the decrease in the value of the securities equals the increase in the value of the futures contracts.D)the increase ion the value of the securities exceeds the decrease in the values of the futures contracts.E)both the securities and the futures contracts decrease in value34)Assume you are holding Treasury securities and have sold futures to hedge against interest-rate risk. If interestrates fallA)the increase in the value of the securities equals the decrease in the value of the futures contracts.B)the decrease in the value of the securities equals the increase in the value of the futures contracts.C)both the securities and the futures contracts decrease in value.D)both the securities and the futures contracts increase in value.35)The advantage of futures contracts relative to forward contracts is that futures contractsA)are standardized, making it easier to match parties, thereby increasing liquidity.B)specify that more than one bond is eligible for delivery, making it harder for someone to corner the marketand squeeze traders.C)cannot be traded prior to the delivery date, thereby increasing market liquidity.D)all of the above.E)both A and B of the above.36)If a firm is due to be paid in deutsche marks in two months, to hedge against exchange rate risk the firm shouldA)stay out of the exchange futures market.B)buy foreign exchange futures long.C)sell foreign exchange futures short.D)none of the above.37)If a firm must pay for goods it has ordered with foreign currency, it can hedge its foreign exchange rate risk byA)staying out of the exchange futures market.B)buying foreign exchange futures long.C)selling foreign exchange futures short.D)none of the above.38)Options are contracts that give the purchasers theA)the right to switch payment streams.B)the obligation to buy or sell an underlying asset.C)the right to hold an underlying asset.D)option to buy or sell an underlying asset.39)The price specified on an option that the holder can buy or sell the underlying asset is called theA)premium.B)put.C)strike price.D)call.40)The seller of an option has theA)right to exchange one payment stream for another.B)ability to reduce transaction risk.C)the obligation to buy or sell the underlying asset.D)right to buy or sell the underlying asset.41)The amount paid for an option is theA)commission.B)strike price.C)discount.D)premium.E)yield.42)Options on individual stocks are referred to asA)individual options.B)American options.C)futures options.D)stock options.43)An option that gives the owner the right to buy a financial instrument at the exercise price within a specifiedperiod of time is aA)put option.B)European option.C)American option.D)call option.44)A call option gives the sellerA)the right to sell the underlying security.B)the obligation to buy the underlying security.C)the right to buy the underlying security.D)the obligation to sell the underlying security.45)An option allowing the holder to buy an asset in the future is aA)premium.B)call option.C)forward contract.D)swap.E)put option.46)An option that gives the owner the right to sell a financial instrument at the exercise price within a specifiedperiod of time is aA)European option.B)put option.C)call option.D)American option.47)A put option gives the ownerA)the right to buy the underlying security.B)the obligation to sell the underlying security.C)the right to sell the underlying security.D)the obligation to buy the underlying security.48)If you buy a call option on treasury futures at 115, and at expiration the market price is 110,A)the call will be exercised.B)the put will be exercised.C)the call will not be exercised.D)the put will not be exercised.49)If you buy a put option on treasury futures at 110, and at expiration the market price is 115,A)the call will be exercised.B)the put will be exercised.C)the call will not be exercised.D)the put will not be exercised.50)If, for a $1000 premium, you buy a $100,000 call option on bond futures with a strike price of 110, and at theexpiration date the price is 114A)your profit is $4000.B)your loss is $4000.C)your profit is $3000.D)your loss is $3000.E)your loss is $1000.51)If, for a $1000 premium, you buy a $100,000 put option on bond futures with a strike price of 114, and at theexpiration date the price is 110A)your profit is $4000.B)your loss is $4000.C)your profit is $3000.D)your loss is $3000.E)your loss is $1000.52)The main advantage of using options on futures contracts rather than the futures contracts themselves is thatA)interest rate risk is not controlled, but the possibility of gains is preserved.B)interest rate risk is controlled while preserving the possibility of gains.C)interest rate risk is controlled, while removing the possibility of losses.D)interest rate risk is not controlled, but the possibility of gains is lost.53)The main reason to buy an option on a futures contract rather than the futures contract isA)to limit losses.B)remove the possibility for gains.C)to preserve the possibility for gains.D)to reduce transaction cost.E)both A and C54)If a bank manager wants to protect the bank against losses that would be incurred on its portfolio of treasurysecurities should interest rates rise, he couldA)sell call options on financial futures.B)buy call options on financial futures.C)buy put options on financial futures.D)sell put options on financial futures.55)Hedging by buying an optionA)has no limit on option premiums.B)limits losses.C)limits gains and losses.D)has no limit on losses.E)limits gains.56)All other things held constant, premiums on options will increase when theA)exercise price increases.B)term to maturity increases.C)volatility of the underlying asset falls.D)A and C are both true.57)All other things held constant, premiums on call options will increase when theA)exercise price falls.B)volatility of the underlying asset falls.C)futures price increases.D)term to maturity decreases.58)An increase in the volatility of the underlying asset, all other things held constant, will ______ the optionpremium.A)increase or decrease B)increaseC)decrease D)Not enough information is given.1)C2)B3)D4)A5)A6)A7)B8)A9)C10)D11)C12)D13)D14)C15)D16)C17)E18)D19)E20)A21)D22)D23)D24)C25)C26)D27)A28)A29)B30)C31)D32)D33)C34)A35)E36)C37)B38)D39)C40)C41)D42)D43)D44)D45)B46)B47)C48)C49)D50)C51)C52)B53)E54)C55)B56)B57)A58)B。