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NEW QUESTION: 1
Basis risk between spot and futures prices for stock indices is caused by changes in:
I. The risk free rate, or the funding cost for the futures
II. Expected dividend yield
III. Volatility of the underlying stock index
A. II and III
B. I and III
C. I and II
D. I, II and III
Answer: C
Explanation:
Explanation
Basis risk between spot and futures prices is the risk that the prices of the futures contract will not move in lockstep with the spot prices. Basis risk creates a problem when investors are trying to get exposure to a stock price through a futures contract, or are trying to hedge a position using a futures contract, and over time the prices of these two diverge.
To understand why basis risk arises, we need to think about how futures prices are determined. Futures prices are nothing but the spot prices plus the carrying cost, ie what it would cost for the seller of the contract to buy the spot security and hold it till the time of delivery in the future. During this holing period, the seller of the contract has to pay interest to fund his purchase in the spot market, and also receives and distributions such as dividends. In the case of commodity futures, he may also have to pay storage charges. When determining the futures prices, it is not known with complete certainty as to what the carrying costs will ultimately turn out to be - interest rates may change, dividends may turn out to be more or less, leading to changes in the futures prices without changes in the spot prices. This gives rise to basis risk.
Therefore changes to the risk free rate, which is a proxy for the true funding cost of the futures position and changes in expected dividends creates basis risk. Volatility of the underlying is irrelevant for futures.
Therefore Choice 'b' is the correct answer.

NEW QUESTION: 2
What is the Solution Assurance (SA) Trigger Criteria and Designated Product List (DPL)?
A. A checklist of potential problems to avoid when installing an IBM storage product
B. A list of possible IBM solutions for known customer problems
C. A list used to determine if a Technical and Delivery Assessment (TDA) is required.
D. A list of competitive storage solutions.
Answer: C
Explanation:
(http://arrowecsmidmarket.typepad.com/files/ibm_technical_and_delivery_assessment_070 120091-1.pdf)

NEW QUESTION: 3
The concept _________ reviews processes to eliminate waste, relies on teamwork, and involves all members of the organization in meeting customer needs.
A. Total Quality Management
B. Time management
C. Information sharing
D. Balancing stakeholder
Answer: A
Explanation:
Explanation/Reference:
Answer option D is correct.
Chapter: Business Management and Strategy
Objective: Strategic Management

NEW QUESTION: 4
다음 중 L2TP (Layer 2 Tunneling Protocol) 인터넷 프로토콜 보안 (IPSec) 연결에서 엔드 투 엔드 보안을 추가할수 있습니까?
A. SHA (Secure Hash Algorithm)
B. TLS (전송 계층 보안)
C. 임시 키 무결성 프로토콜 (TKIP)
D. SSH (Secure Shell)
Answer: A

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