Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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1.
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An
interest rate future is: a. | An over the counter option type
contract | c. | An exchange
traded forward interest rate agreement | b. | An exchange traded interest rate option on a forward interest
rate | d. | A forward
interest rate on a spot curve | | | | |
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2.
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LIBOR
stands for: a. | 'Lay in bed' or
reference rate | c. | London interbank
bid rate | b. | London interbank offer rate | d. | London base rate | | | | |
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3.
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The
difference between a nominal spot and nominal forward term structure is that with the former rates
are quoted at their expected future levels and with the forward term structure rates are
quoted: a. | As they are
expected to be in the future | c. | Todays rates for
future settlement as dictated by future inflation rates | b. | Today's rates
for future settlement at different times as implied by the spot curve | d. | Future rates based upon the current spot
rate | | | | |
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4.
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A
bankers acceptance is: a. | An agreement to open a new
account | c. | A negotiable
certificate of indebtedness issued by a supplier | b. | A negotiable
certificate of indebtedness backed by a commercial letter of credit | d. | An agreement to pay interest at a specified commercial
rate | | | | |
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5.
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Hedging is: a. | The creation of a countervarying contract against an underlying
risk exposure | c. | Purchasing IRF
combinations to produce leveraged returns | b. | The writing of interest rate
futures | d. | An obscure
practice engaged in by the Friendly Grinders horticultural society | | | | |
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