Simple Finance Quiz
1 Suppose that a speculator anticipates depreciation of US$ against Euro 3 months from now from the current 3 months forward rate. To make profit the speculator should
A) Sell US$ spot and buy Euro 3 months forward
B) Buy US$ spot and sell Euro 3 months forward
C) Sell US$ 3 months forward
D) Sell Euro 3 months forward
2 In a swap transaction where two fixed-floating currency swaps are combined to form a fixed to fixed currency swap is known as
A) Roller-coaster swap
B) Amortised swap
C) Amortising swap
D) Circus swap
3) Which of the following equation is true?
A) Short underlying assets +long call =long put
B) Short underlying assets + long put =long call
C) Long underlying asset + short call=long put
D) Short underlying asset + long put = short call
4) Other things being equal which of the following will cause an increase in the value of a bond?
A) Decrease in the term of maturity
B) Increase in the required rate of return on maturity
C) Decrease in the discount on the bond on issue
D) Increase in the premium on maturity of the bond
5) The amount that can be realized by a company if it sells its business as an operating one is termed as
A) Going concern value
B) Market value
C) Book value
D) Replacement value
Will post correct answer at 10.15 a.m 07/11/2012
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