Currency futures contracts relative to forward contracts

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Reference no: EM131593871

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

Reference no: EM131593871

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