- QI What is meant by the exercise or strike price on an option? Explain how options can be used to protect a short position. Q2- What are the three main categories of financial futures? How does the currency futures market differ from the foreign exchange market?

Discuss the factors giving rise to an inverted futures market for a storable versus a non-storable commodity. What are the implications for a hedger?

M3 The terms "contango" and "backwardation" are used to describe term structures of forward/futures prices (i.e., patterns of forward/futures prices of various maturities). Please explain the meanings of these two terms and the situations in which they occur (i.e., the reasons for them). Also, consider futures prices of gold. Do you expect them to be in contango or backwardation? Why?

What is a REIT What are the advantages and disadvantages of REITs List and Describe the different types of REITs What is an OPTION Differentiate between a PUT and a CALL OPTION List and Describe the different types of OPTIONS What is a REPO What are the advantages and disadvantages of REPOS List and Describe the different types of REPOS What is the formula for calculating REPO RATE Define (a) Market Risk (b) Interest Rate Risk (c) Commodity Risk (d) Currency Risk

What is a normal market for futures? What does an inverted futures curve indicate?

How can exchange-rate risk be hedged using forward, futures, and options contracts? OA. Firms can buy a put option to hedge against a rise in the exchange rate. OB. Firms can buy a call option to hedge against a rise in the exchange rate. OC. Firms can sell forward contracts to hedge against a rise in the exchange rate. OD. All of the above.

(a) Outline in detail what is meant by a forward and futures contract. Evaluate the relationship between futures price and spot price, and give reasons to justify the necessity for exchange margin accounts.   (b) Explain the concept of cost of carry model and its role in the pricing of financial futures contracts.

“Hedging is the basic function of futures market”. Discuss the statement in the light of uses of futures contract.

D3) How is credit risk managed in case of foreign exchange futures contracts? Discuss with the use of an example. .