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CorporateTreasury Risk Management Flashcards | StudBud
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CorporateTreasury Risk Management
CorporateTreasury Risk Management
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Questions
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Answers
1
An Out of the Money option has an intrinsic value
which is greater than the time value
which is less than the time value
equal to zero
2
if we expect a rise in volatility
time to sell options
time to buy options
3
the first step to corporate risk management is
risk identification
risk management policy implementation
strategy development
performance evaluation
4
Value at risk is
a measure of profitability
a unique measure of potential loss
a measure of potential loss
of measure of financial stress
5
to hedge a forward purchase of USD against EUR
sell the USD against EUR forward
Sell EUR Call/USD
buy EUR Put/USD Call and sell EUR Call/USD Put to finance it
6
To hedge a future payment in USD a company can buy
A EUR Put/USD CAll
A EUR Call/USD Put
7
A foreign exchange swap is a cash management tool
true
false
8
A call spread is
A bear strategy
A bull strategy
9
a risky environment is defined by
known event, unknown probability
known event, known probability
unknown event, unknown probability
10
If EUR/USD is 1.25 and USD/JPY is 100 how much is EUR/JPY?
125
0.0125
80
11
which of these risks is not a market risk
country
liquidity
interest rate
exchange rate
12
an uncertain environment is defined by
known event, known probability
unknown event, known probability
unknown event, unknown probability
13
The purchase of a call and a put same strike is a strategy called
straddle
strangle
14
The initial deposit to trade on the futures market is equal to
two vol standard deviations
one vol standard deviation
the maximum gain
15
In a foreign exchange swap, if we BUY (spot) and SELL (forward) EUR against USD...
we deposit EUR
we borrow EUR
16
You call a bank. EUR/USD is 1.2510/15. At what rate do you sell USD?
1.2510
1.2515
17
If the forward rate EUR/USD is1.2512 and the spot rate is 1.2500 then....
heding a future payment in USD has a cost
hedging a sale in USD generates a profit
hedging a payment in USD generates a profit
18
the larger the spread
the less competitive the price
the most competitive the price
19
In invoice in foreign currency to be settled in 60 days is a
conversion risk
economical risk
transactional risk
20
risk is equal to
impact divided by probability
probability multiplied by impact
probability divided by impact
21
An In The Money Option has a delta
less than 0.5
equal to zero
greater than 0.5
equal to 1
22
If the forward rate in EUR/USD is 1.2512 and the spot rate is 1.25 then
EUR interest rate is higher than USD interest rate
we cannot say anything about interest rates
USD interest rate is higher than UER interest rate
