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Which of the Following Can Be Used as a Snapshot

Question 41
Multiple Choice

A portfolio manager is concerned that the expected drop in interest rates is going to lower the yield on the $1,000,000 of T-Bill she plans to buy in 3 months. She can hedge this potential interest rate risk by A) taking a short position in 3-month T-bill futures. B) taking a long position in 3-month T-bill futures. C) buying a call option on 3-month T-bill futures. D) buying a put option on 3-month T-bill futures. E) Either b or c would work.

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Q 42
Unlike hedging with futures, hedging with options A) locks in a particular price or rate of return for a hedger. B) exposes a hedger to a risk of large losses. C) allows a hedger to benefit from the upside potential of his spot position. D) is free (i.e., creating the hedge is costless) E) both b and c
Q 43
A speculator sells one 10-year T-note futures contract for $100,000 of face value of T- notes at 98'14. Three month later, the contract expires at 101'10.5. How much did the speculator gain (lose)? A) $2,965 B) ($2,965) C) $2,891 D) ($2,891) E) $328
Q 44
A speculator sold one 10-year T-note futures contract for $100,000 of face value of T- notes at 99'04.5. He posted a $2,500 margin on his account. The contract's closing price at the end of the day is 98'24. What is the amount of funds on the speculator's account after marking-to-market? A) $2,500 B) $3,305 C) $2,891 D) $3,500 E) $2,109
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