QUESTION 36

1. Suppose the initial margin requirement for the oil contract is 20%. Contract size is 1000 barrels. The spot oil price $62.48. Current future price for March is $62.48. If the spot oil price at maturity date is 65.48, and you only invest on oil commodity and dont use future contract, whats your return if you buy the oil?

	A.	12%
	B.	2%
	C.	4.8%
	D.	9%

1.82 points

QUESTION 37

1. An oil distributor is planning to sell 100,000 barrels of oil in March (the current future price for March is $90) and wishes to hedge against a possible decline in oil prices. He sold 100 contract , each contract for 1,000 barrels. If at March oil price turns out to be $100. Whats the revenue from oil sales and profit on the futures?

	A.	Revenue $10,000,000, Profit from futures -$1,000,000.
	B.	Revenue $9,000,000, Profit from futures $0.
	C.	Revenue $10,000,000, Profit from futures $0.
	D.	Revenue $9,000,000, Profit from futures $-200,000.

1.82 points

QUESTION 38

1. Suppose a U.S. investor wants to invest in a British firm currently selling for 80 per share. The investor has $8,000 to invest, and the current exchange rate is $1.25/. After 1 year, the exchange rate is $1.40/ and the share price is 85. How much of the dollar-denominated return is due to the currency change?

	A.	10.00%
	B.	10.80%
	C.	12.75%
	D.	8.20%

1.82 points

QUESTION 39

1. Which one of the following contracts requires no cash to change hands when initiated?

	A.	listed put option
	B.	short futures contract
	C.	forward contract
	D.	listed call option