Quiz Ch 24 – Price Dynamics of Futures Contracts Approaching Expiration
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
As the expiration of a futures contract approaches, what typically occurs to the price?
As the expiration of a futures contract approaches, what typically occurs to the price?
What is the main goal of financial futures?
What is the primary purpose of currency swaps?
Why are the activities of speculators considered in the futures markets?
In selling a futures contract, a speculator is expressing an expectation that prices will ________ by the contract’s expiration.
True or false: Those buying financial futures place an order for the acquisition of a financial asset at a later date.
True or false: When a commodity producer utilizes put options to mitigate the risk of falling commodity prices, it is essentially purchasing insurance.
True or false: A significant number of large companies employ derivatives as part of their risk management strategy.
True or false: In a currency swap contract, a firm might agree to make regular payments in one currency in exchange for receiving a series of payments in another currency.
True or false: Corporations should opt for derivatives use in speculation rather than hedging unless they believe the odds are in their favor.