Derivatives - Markets
- Created by: axzolanski
- Created on: 16-01-22 17:05
Other questions in this quiz
2. What might be achieved by a bond issuer retaining the right to repay a bond in either of two currencies at a pre-determined rate?
- Enhanced gamma
- An enhanced coupon rate on the bonds that will attract investors
- A superior credit rating for the bonds
3. What advantage can some derivatives present over the cash underlying as a vehicle for a short position?
- They are always more liquid
- They are more accurately priced
- They do not rely on a facility to borrow the underlying
- It is usually illegal to run short positions in the cash market
4. Why might a forward or futures price be higher than the spot price for the same asset?
- Because of high dividends from the asset
- Because the market price is expected to rise
- To compensate the seller for continuing to bear the costs of ownership
- Because of low interest rates
5. Why would a callable bond issuer call back the bonds?
- To avail of the opportunity to refinance at a cheaper rate
- Because that is what investors expected at the time the bonds were issued
- To provide enhanced value to investors
- Because the bonds are priced below par
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