Quiz Ch 24 – T/F Margin Requirement for Both Parties in Futures Contract
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
True or false: Margin is required from both the seller and buyer in a futures contract.
True or false: Margin is required from both the seller and buyer in a futures contract.
True or false: Mark-to-market applies to forward contracts.
True or false: Mexico acquired call options to secure the price of its oil, establishing a base floor for its revenue stream.
True or false: To safeguard against declining oil prices, an oil producer would sell, rather than buy, crude oil futures.
True or false: Employing options to mitigate downside risk is referred to as a “protective put” strategy.
True or false: Through options, a company can safeguard against rising raw material prices at a cost, while still enjoying the advantages of price decreases.
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.