Questions from Financial Markets

Q: What is a derivative security?

What is a derivative security?

Q: What must happen to the price of the underlying T-bond

What must happen to the price of the underlying T-bond futures contract for the purchaser of a call option on T-bond futures to make money? How does the writer of the call option make money?

Q: What must happen to the price of the underlying stock for the

What must happen to the price of the underlying stock for the purchaser of a put option on the stock to make money? How does the writer of the put option make money?

Q: What are the three ways an option holder can liquidate his or

What are the three ways an option holder can liquidate his or her position?

Q: What factors affect the value of an option?

What factors affect the value of an option?

Q: Based on economists’ forecasts and analysis, one-year Treasury bill

Based on economists’ forecasts and analysis, one-year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows: Using the liquidity premiu...

Q: Who are the major regulators of futures and options markets?

Who are the major regulators of futures and options markets?

Q: Which party is the swap buyer and which is the swap seller

Which party is the swap buyer and which is the swap seller in an interest rate swap transaction?

Q: What are the differences among a spot contract, a forward contract

What are the differences among a spot contract, a forward contract, and a futures contract?

Q: What are the differences between a cap, a floor, and

What are the differences between a cap, a floor, and a collar? When would a firm enter any of these derivative security positions?