[FIN 3506] - Final Exam Guide - Comprehensive Notes for the exam (90 pages long!)

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bronzeturtle979

29 Nov 2016

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Learning objectives: understand what a futures contract is, it uses and its history, understand the concept of an options contract, know the different general categories of traders and their motivation, futures contracts. A futures contact is an obligation to buy (long position, agree to take delivery) and demand or sell (short position, agree to make delivery) an asset at a certain time in the future for a certain price. The price is derived form the balance of supply and demand for the underlying asset. These are standardized contract that trade on an exchange. 3: currency, single stock, weather and other exotics. Index: amount (quantity, delivery, quality, traded on an exchange, settled daily and marked to market daily, fungible (most are exited by offset, delivery in less than 2%, no credit risk. Exchanges: physical (these have been united through mergers, cbot, cme, nymex, electronic, spot price.

Related Questions

1) Which of the following statements is true of warrants?

a. A warrant is almost identical to a put option.

b. When warrants are exercised the number of warrants still outstanding increases.

c. A warrant is a combination of call and put options.

d. A warrant is issued by the corporation rather than another

2) Which of the following is an attribute of futures contract?

a. There are no limits on the size of the position that any investor can take in financial futures markets.

b. Futures contracts are marked to the market on a daily basis

c. Margins for futures are more relative to other types of markets.

d. Almost all futures positions are settled by delivery.

3) Which of the following is not a general conclusion of studies of stock prices?

a. The serial correlation in daily returns in U.S. stocks is positive.

b. The serial correlation in longer period returns (monthly, annual) in U.S. stocks is negative.

c. Filter rules greater than 1% generally do not make money.

d. Stocks that have done well in the past are also likely to do well in the future.

e. There are more runs in daily stock prices than we would expect to find under a random walk.

4) Which of the following is an implication of market efficiency?

a. Resources are allocated among firms that put them to the best use.

b. No investor will do better than the S&P 500 in any time period.

c. No investor will do better than the S&P 500 consistently after adjusting for risk.

d. No investor will do better than the S&P 500 consistently after adjusting for risk and transactions costs.

5) Tests of market efficiency tend to

a. look for statistical dependencies that exist in price changes over time.

b. measure the nature of the impact of new information on security prices as that new information becomes available.

c. search for trading systems that might be able to generate supernormal profits.

d. all of the above

[FIN 3506] - Final Exam Guide - Comprehensive Notes for the exam (90 pages long!)

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