1. To hedge a short position in Treasury bonds, an investor most likely would
a ignore interest rate futures.
b buy S&P futures.
c buy interest rate futures.
d sell Treasury bonds in the spot market.
e None of these is correct.
2. On April 1, you sold one S&P 500 index futures contract (with one contract being on 250 times the index) at a futures price of 950. If on June 15th the futures price were 1012, what would be your profit (loss) if you closed your position (without considering transactions costs)?
a $1,550 loss
b $15,550 loss
c $15,550 profit
d $1,550 profit
e None of these is correct
3. A long forward contract on an asset plus a long position in a European put option on the asset with a strike price equal to the forward price is equivalent to
a A short position in a call option
b A short position in a put option
c A long position in a put option
d None of the above