Q1) The transaction designed to exploit mispricing in the relationship between futures and spot prices is called:

a. a repurchase agreement.

b. a hedge.

C. speculation.

d. carry arbitrage.

e. none of the above.

Q2) Which of the following can explain a backawadition?

A. The interst rate exceeds the divend yield.

b. the cost of carry is negative.

G. tutures prices y is nagarvard prices.

d. the market is at full carry.

e. none of the above.

Q3) which of the following best describe normal contango?

a. the spol pricing best descrile inures price.

b. the futures Dr ce less than an ine spot pric

d. the cost of carry is negative.

e. none of the above.

Q4) Suppose I /6 curenly us, the September wres pice is 56 and the December futures price is 568. Whaldoes the spread of 58 represent?

a. the cost of carry from July to September.

b. the expected risk premium from July to September.

C. the cost of carry from September to December.

d. the expected risk premium from September to December.

e. none of the above.

Q5) Suppose you sold a futers contacat at $150. if the futuers price changes to $147, what is the value of this contract an instant before it is marked-yo-market?

a. $0.00

b.$3.00

C. -$3.00

d. it is impossible to tell.

e. none of the above.

Q6) Suppose there is a risk premium of $0.50. The spot price is $20 and the cost of carry is $2. What is the expected spot price at expiration?

a. $21.50

b. $22.50

C. $20.50

d. $24.50

e. none of the above.

*LIEK*