Quiz Ch 24 – T/F Options Usage: Speculation versus Risk Reduction
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
True or false: Firms employ options for speculation rather than risk reduction.
True or false: Firms employ options for speculation rather than risk reduction.
True or false: Well-managed hedging has the potential to be a very profitable activity.
True or false: Commodity producers can protect their revenues by employing put options.
True or false: Insurance is effective in risk reduction when the company can diversify risk across multiple policies.
True or false: Speculators are essential for the efficient functioning of futures markets.
True or false: The seller can choose the delivery location for the commodity in exchange-traded futures contracts.
True or false: Standardized futures contracts consistently expire on the same day each year.
True or false: A swap involves two counterparties arranging to exchange one stream of cash flows for another.
True or false: Swap contracts is structured based on either interest rates or currencies.
What do they agree to in a currency swap between two borrowers?